why did cryptocurrency crash this weekend? A few reasons:
This morning China outlawed ICOs, saying they have “seriously disrupted the economic and financial order”. Whenever a government sanctions bitcoin or cryptocurrencies the market always takes a hit, especially right after the SEC warned against the legality of some ICOs.
And since the Chinese government ordered all ICOs to return funds to investors, there’s probably some uncertainty about what will happen to the price of mainstay currencies like Bitcoin and Ethereum when smaller tokens received in ICOs are re-converted back. For example, NEO (formerly AntShares), a Chinese-based ICO/cryptocurrency, is down 50% over the last few days.
Another possibility – the market was simply overheated. This crash started right around the time Bitcoin hit an all-time high of a few dollars under $5,000. In other words this may be a natural cool down – if you look at Bitcoin’s history periods of rapid growth are always followed by some type of downturn – the same thing happens when traditional equities rapidly appreciate.
The next day or so will tell us if this was a temporary bump in the road or the start of the next major correction. For now, all anyone can do is watch and let the market do its thing.
info source: https://techcrunch.com/2017/09/04/cryptocurrencies-have-crashed-20-in-two-days/
image source: coinmarketcap.com