The world of cryptocurrencies has proven itself to be remarkably volatile, with even a mere hint of a news story oftentimes sending the prices of leading currencies tumbling. For example, when rumors began to fly that the co-founder of ethereum had died (he hadn't), the price of the cryptocurrency fell, in spite of the fact that the rumors were quickly debunked. Now, the past few weeks has shown that the currency market has been subject to continued volatility, even after it climbed to a record high. Over several weeks since achieving an all-time high of nearly $180 billion in market cap across all cryptocurrencies, the industry has fallen by about 40%, according to Forbes. As of this writing, the price has bounded back to $4000.
$179.8 Billion to $112 Billion
As of Thursday of this past week, cryptocurrencies reached a high of $112 billion in aggregate market cap, according to CoinMarketCap. This constitutes a fall of 37.7% as compared with the all-time high, achieved earlier in the summer.
This is not the first time in the summer that the market has experienced tumultuous fluctuations. It fell below $135 billion on September 5th, then climbed back up to over $165 billion on Friday, September 8th. That same day, it dropped by about $19 billion, achieving $146 billion market caps that same day. Over the next several days of trading, the cryptocurrency fluctuations experienced across the industry were much narrower.
Government Regulators Get Involved
Perhaps some of the reason for the most recent sell-off in cryptocurrencies has to do with governments around the world. Many governments have grown more suspicious of cryptocurrencies and have begun to enforce greater degrees of regulation. Just days ago, China's government announced that it would ban ICOs and shut down bitcoin exchanges in the country. British regulators have increased their watch over digital currencies, and other countries seem to be following suit.
Cryptocurrency markets have reacted negatively and decisively to news out of China. Bitcoin, ether, and other top currencies fell by about 13% each in the 24 hours since China's announcement about the exchanges. Litecoin fell by more than 20% in the same period. Chinese cryptocurrency exchanges received formal notice about shutdowns late in the week, and it's likely that this will continue to push against the market, which had been on the rise throughout the year. Still, the significant swings have been par for the course for cryptocurrencies. After all, in spite of the recent downturn, the industry as a whole has still grown exponentially since the beginning of the year. Some of the fastest-growing cryptocurrencies have gained value by dozens of times over the span of just a few months, prompting speculation that the entire market is a big bubble.