Bitcoin touched below $6,000 and dozens of smaller digital tokens including Ether retreated as this month’s sell-off in cryptocurrencies showed few signs of letting up.

The largest digital currency fell as much as 6.2 percent to $5,887, the lowest level since June, before paring some of the drop, according to Bloomberg composite pricing. Ether sank as much as 13 percent, while all but one of the 100 biggest cryptocurrencies tracked by Coinmarketcap.comrecorded declines over the past 24 hours.

The total market capitalization of virtual currencies dropped to $193 billion. That’s down from a peak of about $835 billion in January.

“Most cryptocurrencies have been overvalued for a very long time,” said Samson Mow, chief strategy officer at blockchain developer Blockstream Corp. “It’s hard to pin this move on any particular factor, but it feels like the opposite of last year when money piled in as people felt FOMO. Now it’s piling out as they sense panic.”

While cryptocurrencies rallied in July on hopes that a Bitcoin-backed exchange-traded fund would attract new investors, U.S. regulators have yet to sign off on multiple proposals for such a product. The letdown has coincided with growing concern that entrepreneurs who raised crypto-denominated funds via initial coin offerings are now cashing out of holdings such as Ether, the token for the Ethereum blockchain that is a popular platform for crypto projects.

“The big story in the market today is the huge weakness in Ethereum,” Timothy Tam, chief executive officer of CoinFi, a cryptocurrency data analysis company, said in a phone interview. “Bitcoin has held up relatively well versus Ethereum. It’s still quite weak versus the U.S. dollar.”

At the height of Ether’s rally last year, the digital coin comprised 32 percent of cryptocurrency market capitalization, coming within striking distance of Bitcoin’s 39 percent. Ether now makes up about 14 percent, while Bitcoin accounts for 54 percent after falling less quickly than its smaller peers, according to Coinmarketcap.com.

“ICOs that have raised a lot of money are really feeling a lot of pain” as their crypto holdings lose value, Tam said.

Ether has tumbled about 40 percent this month, while Bitcoin has dropped about 26 percent.

It’s unlikely that recent global market turbulence, fueled by Turkey’s currency crisis, is impacting cryptocurrencies, said James Quinn, head of markets at Kenetic, a blockchain company with investment and advisory businesses.

“Correlations historically have been extremely low between cryptocurrencies and other asset classes,” he said in a phone interview from Hong Kong. “Which is one of the reasons why there is interest in this space and why people want to make an allocation in this space.”

Still, anyone expecting Bitcoin to provide a haven from turbulence in global markets will have been disappointed. The cryptocurrency’s slide against the dollar this month is almost as big as the Turkish lira’s 25 percent slump.

For more on cryptocurrencies, check out the Decrypted podcast:

 

— With assistance by Eddie van der Walt

(Updates prices.)
unnamed-2-163
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s