The week was brutal for cryptocurrency as the digital monetary medium saw its market value being eroded significantly. According to a report published in the CNBC, around $18 billion of the total market value of cryptocurrencies was wiped out in three days, from Wednesday up to Friday.
And, although cryptocurrencies rallied on Friday, it wasn't enough to set-off against the initial losses it had incurred earlier. On a broader basis, the report stated that Bitcoin had lost about 5% of its market value – where it was valued at about 6,500 against a dollar at the start of the week, on Friday it was traded at about 6,200 per dollar.
The biggest losses were, however, posted by the cryptocurrency platforms XRP and Ether which had lost about 18% and 12% of their market values respectively. The reason for cryptocurrencies losing their market value was two-fold.
The first that there was rumour that the cryptocurrency platform Bitfinex was in the process of stopping trading in fiat currencies. And the second that the slump of the stock market had trickled down to the cryptocurrency platforms as well.
Speaking and elaborating on the first, CEO and founder of BKCM, Brian Kelly was quoted by the CNBC as saying, "That (the rumour about Bitfinex) spooked investors a little bit – it was a main cause of the downdraft but we're seeing prices mostly back to normal.
Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this." Meanwhile, explaining about the latter rationale, the same report quoted BitBull Capital's CEO of cryptocurrency funds, Joe DiPasquale who stated, "When we saw equity markets crumble, there was some fear in the cryptocurrency market as well.
I think there was an initial jolt due to larger market activity and the sell off." Despite the promises it has brought to the financial table, cryptocurrency, however, continues to be a dividing point for experts and analysts.
This latest bout of volatility only adds fuel to the existing debate.