Cryptocurrency markets were back in the red after days of sideways movement. At 14:22 UTC, the overall market capitalization of cryptocurrencies was $523.2 billion, down from a high of $567.1 billion earlier this morning. In the last 24 hours, they have shed approximately 5.3% of their total value.
NEM was the biggest loser among the top 10 most-traded cryptocurrencies, losing as much as 19% of its total value earlier this morning. At 14:29 UTC, it was trading at $0.78, down 16.7% from its price 24 hours ago. Withdrawals, deposits, and trading of the coin has been halted at Coincheck, one of the largest crypto exchanges in Japan.
Bitcoin was trading at $10,707.53, down 3.86% from its price 24 hours ago. Its utility has been the subject of much debate and discussion at the 2018 World Economic Forum in Davos, Switzerland.
Coincheck Halts Trading
Coincheck Inc. suspended withdrawals and deposits for all cryptocurrencies, except bitcoin, on its platform. It did not provide a clear reason for the decision and said it was preparing a “detailed announcement” regarding the matter. (See more: Coincheck Suffers The Worst Hack In Cryptocurrency History.)
Meanwhile, Reddit commenters are speculating that the exchange’s decision was triggered by a heft of NEM coins. Even if that wild rumor is true, the fallout may not be as drastic as that from the Mt. Gox crash in 2013. After legalizing cryptocurrencies last year, Japan instituted a system of licenses, which require capital controls and security provisions, for exchanges. Coincheck had applied for a license and falls under the supervision of Japan's Financial Services Agency (FSA), according to Bloomberg.
Ripple Criticism Intensifies
Criticism against Ripple, whose value surged by more than 35,000 percent in 2017, has intensified this week. Two reports, published over the last two days, highlight the dubious nature of its cryptocurrency. (See also: If You Invested $100 In Ripple In Jan 2017, What Would You Have Now?)
Ripple’s technology is being tested by banks to streamline cross-border transfers. But a Bloomberg report states that they seem largely uninterested in its cryptocurrency XRP, which the company promotes as being a facilitator of the technology. As such, the run-up in its price on the back of reports touting the testing of its technology is odd.
Added to this is the suspicious nature of transactions being conducted by Ripple’s founders, who own about 60 percent of the overall issued XRP. For example, a CNBC report states that they sold $91.6 million worth of XRP in the fourth quarter of 2017 after its price increase.
XRP has been on a downward slide for much of this year. But Ripple’s loss is Stellar’s gain. Lumens, its cryptocurrency which shares technology with Ripple, has recorded a net gain this year.
Bankers Continue To Pile On
Cryptocurrencies, more specifically bitcoin, continue to be a topic du jour at the World Economic Forum gathering in Davos.
Cecilia Skingsley, deputy governor of Sweden’s Central Bank, said at the gathering that cryptocurrencies, including bitcoin, do not “meet the criteria” for money.
“They can be called an asset, fine, but they are not a very good version of money because it’s not a stable store of value where they fluctuate a lot,” Skingsley said. Sweden has already formulated regulations for cryptocurrencies and is exploring the idea of a national cryptocurrency. To that end, it also published a paper on the topic last year.
Stephen Poloz, governor of the Bank of Canada, said it was difficult to analyze bitcoin as an asset because there was “no intrinsic value” in bitcoin. The cryptocurrency is often referred to as digital gold. However, critics point to gold’s application in industry and fine jewelry as proof of its value. Bitcoin is yet to find similar applications, they say. The latest set of comments follow earlier remarks made by senior bankers and economists yesterday criticizing bitcoin’s role in illegal transactions and “all sorts of dark trades.” (See also: Bitcoin Price Stalls, World Leaders Talk Regulating Crypto.)
In the United States, NYU professor Nouriel Roubini became the latest economist to come out swinging against cryptocurrencies. “But for money to have value and to generate economies of scale, only so many currencies can be operated at the same time…the idea that hundreds of cryptocurrencies could viably operate together not only contradicts the very concept of money; it is utterly idiotic,” Roubini wrote.
The statements are indicators of possible regulation that may be imposed on cryptocurrencies in the coming year. In turn, this is expected to widen the market to trade them or use them in daily transactions.
More Trading Platforms Sign On to Bitcoin
In the meanwhile, trading platforms are continuing to embrace digital coin trading. Robinhood, a stock trading app that is popular with Millennials, announced plans to introduce cryptocurrency trading without commission fees in February.
Trading Technologies Inc., another maker of popular trading software, is also planning to add Coinbase to its list of venues. Rick Lane, the company’s CEO, said that institutional trading in cryptocurrencies was “largely underserved” due to the absence of professional technology. “There’s a lot of trading volume and trading opportunity left on the table,” he said. Whether that opportunity leads to an influx of investors and liquidity to cryptocurrency markets remains to be seen.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.