Cryptocurrencies have had a rough year in 2018, as concerns about increased regulations and market manipulation weigh on the prices of digital tokens. That sell-off reached a new level earlier Wednesday with investors unloading tokens en masse after the U.S. Securities and Exchange Commission delayed a decision on whether or not to greenlight a bitcoin-based exchange-traded fund (ETF). (See also: NYSE Parent ICE to Roll Out Crypto Exchange.)
As a result of the sell-off, Bloomberg, citing Coinmarketcap.com, reported the market value of all cryptocurrencies tracked fell to $230 billion, representing the lowest value since November. Since their peak in January, cryptocurrencies have lost around $600 billion in value, which Bloomberg pointed out is the same as seeing the entire market value of Visa Inc. (V) disappeared twice.
As of noon London time, bitcoin was down around 7% while ripple was off 10% and ether and litecoin were both trading 4.8% lower, reported Bloomberg. Of the 100 largest digital tokens tracked by Coinmarketcap.com only one was trading higher. IOTA and EOS, two digital tokens with values of more than $1 billion declined more than 15%, noted the report.
Bitcoin ETF Expected to Bring Legitimacy
Many investors view bitcoin and cryptocurrency ETFs as a way to bring legitimacy to a market that is anonymous and unregulated. Investment firm VanEck and Solid X, a financial service company, partnered earlier in the year to get approval for a bitcoin ETF, but its efforts have been rejected by the SEC. This was the third time around. The SEC decided to delay making a decision until Sept. 30.
Bulls were also betting that if the SEC greenlighted the ETF, it would help sustain the rally in cryptocurrencies seen in July. Despite the optimism on the part of crypto bulls, many regulators around the globe have been carefully scrutinizing the digital token market. In denying the application to launch the ETF in the past, the SEC has cited the potential for fraud and the lack of investor protections. (See also: 'Pump And Dump' Hits Cryptocurrency Market.)
Bitcoin May Be the Best Bet
While investors are selling off everything related to cryptocurrency, some investors are still touting digital tokens, namely bitcoin. Tom Lee, managing partner at Fundstrat Global Advisors, told CNBC that bitcoin should remain steady at its current levels even if its a far cry from the $19,000 it traded at late last year.
"Bitcoin is the best house in a tough market," said Lee on CNBC’s “Fast Money.” "Bitcoin isn't broken if it's holding at these levels. I think people are afraid it is going to go back down to $6,000 and never come back from those bear markets."
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