If there is any pattern to the wild swings of the cryptocurrency market it would be this – a massive rally bringing exchange rates to new highs followed by a strong correction and than a stable slow growth period until the next rally. Now, after a number of days of falling prices, we seem to be well into the correction phase again with all the top cryptocurrencies in the red.
The price of Bitcoin is now around just $1965 (down 23% in a week), Ethereum is around $158 (down 36% in a week), Litecoin is down 23% to just $39, Dash is down 33% from a week ago to just $136 and Ripple’s XRP is down 32% from last week. In total, the market cap of all cryptocurrencies is a mere $68 billion, down from as high as $120 billion in June.
The leading reason which investors attribute the fall in the price of Bitcoin to is the upcoming showdown between the two sides of the Bitcoin civil war. By August 1st an agreement needs to be reached on the implementation of SegWit2x, and if a compromise fails to be achieved the original blockchain could be split in two with a hard fork.
Ethereum suffers because of the many projects in the recent wave of ICOs that seem to add no value to the ecosystem while adding systemic risk with the centralization of massive holdings in the hands of a few.
These two factors, as they are impacting the prices of the two largest coins, appear to be dragging the whole market down. And of course there is the issue of short term traders that just came into the market for the prospect of making a quick return now cashing out and leaving the prices to fall.