There has been a bloodbath in the last couple of days in cryptocurrency universe. Reports after reports of authorities across the world clamping down on digital currencies, especially Bitcoin, has led to a loss of over USD 150 billion in market capitalisation of cryptocurrency market.
From its peak of USD 835.5 billion achieved on January 7 (Sunday, 2130 IST), the market cap stood at USD 677 billion on January 11 (Thursday, 1530 IST). That means, USD 158 billion or nearly one-fifth of the total valuation has been wiped off the cryptocurrency market in just four days, as per data provided by CoinMarketCap.
In fact, by 1000 hours on Thursday, the loss was over USD 200 billion. The total market cap dropped to USD 628 billion in early trade before climbing.
In last four days, Bitcoin has lost USD 65 billion, Ripple also USD 65 billion, Bitcoin Cash USD 9 billion and Tron USD 5 billion in their valuations. On the other hand, Ether was one of the rare major currencies which added (USD 18 billion) to its market cap.
The flurry of negative news from South Korea where the police and tax agencies raided largest cryptocurrency exchanges including Bithumb, Coinone dampened the mood on cryptostreet.
The clampdown which resulted in a shortage of cryptocurrencies in the local market pushed the rates up in South Korea. CoinMarketCap, a popular data site, therefore removed the exchange prices from South Korea in its calculation, resulting in an apparent drop in prices of currencies.
“This morning we excluded some Korean exchanges in price calculations due to the extreme divergence in prices from the rest of the world and limited arbitrage opportunity. We are working on better tools to provide users with the averages that are most relevant to them,” CoinMarketCap said on Monday.
Many people including David Schwartz, Chief Cryptographer at Ripple, opined that the decision triggered some panic selling. “Coinmarketcap's decision to exclude Korean prices from the displayed XRP price made the price appear to drop, likely triggering some panic selling,” he said on Twitter.
However, he added that the new price was "more accurate and meaningful".
The fear of China restricting the electricity supply to cryptocurrency miners also added to the bearish mood in the market. China accounts for over 70 percent of the Bitcoin network’s collective hash rate.
Also Read: Energy consumed by bitcoin miners around the world is more than over 150 countries
In the last couple of days, almost all major cryptocurrencies were trading in red. Even at the time of reporting, major currencies including Bitcoin, Ether, Ripple, Cardano, Litecoin were trading at a lower value compared to previous day. Bitcoin Cash and IOTA were the only major currencies which were bullish.