Why is the cryptocurrency market down today?10/27/2021
MUCH of the cryptocurrency market is getting hammered on Wednesday – with major coins leading the way.
The price of Bitcoin, the biggest cryptocurrency on the market, has tumbled 6% over the past 24 hours.
It is sitting at $58,898.76, according to Coinmarketcap.
The impact of Bitcoin appeared to have an effect on other major cryptocurrencies including Etheruem, Cardano and XRP.
These coins have dropped 4%, 7%, and 8%.
Plus, another cryptocurrency NuCypher, which gained big earlier this month after it began trading on a big South Korea exchange, has plummeted 14% over the past 24 hours.
Keep in mind that cryptocurrencies are highly volatile, meaning their values often make large swings with no notice.
The extreme volatility and the accompanying sudden market falls are just one of the reasons that investing in cryptocurrency is a very risky business.
You can be left with less money than you put in, and the markets can shift rapidly.
You might not be able to access your investment if platforms go down and you could be left unable to convert crypto into cash.
There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you don’t understand and you should never put in money that you can't afford to lose entirely.
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Why are crypto markets down?
The sell-off today could be attributed to Bitcoin, which has seen big gains in the past month.
But now it appears some investors are looking to cash on the surging value.
The price plunge comes after it hit an all-time high last week following the launch of a Bitcoin futures exchange-traded funds.
Kunal Sawhney, chief executive officer of equities research firm Kalkine Group, told Yahoo Finance that a 5% to 10% correction is "quite normal," given the surge in trading in the past month.
Cryptocurrencies have suffered a series of blows recently, on top of their regular volatility.
The major cryptos dropped last month following a global sell-off in stock markets.
It comes after the struggling Evergrande property giant in China sparked wider economy fears.
Snowed under a huge debt pile, a business default could hurt more than just China's economy.
Speaking of China, it also banned cryptocurrencies in September.
In early September, JP Morgan analysts also warned that the markets were due a correction following "retail investor mania".
And in August, hackers stole $600million in a cryptocurrency heist after spotting a "vulnerability" in a blockchain site.
It came after a series of worldwide crackdowns on the cryptocurrency market, and another big sell-off in global stock markets.
In July, the Met Police also seized nearly £180million in the largest-ever cryptocurrency raid in the UK.
The money was discovered as part of a major probe into money laundering.
It was the biggest amount of the cryptocurrency seized in the UK and one of the largest in the world.
The seizure tops the previous recent record made after police seized £114million.
Binance has also been banned in the UK, signalling a major "red flag" to investors, Hargreaves Lansdown senior investment and markets analyst Susannah Streeter previously told The Sun.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Following the ban, Brits have been having trouble withdrawing and depositing money into their Binance accounts, according to reports from the Financial Times.
The UK isn't the only one getting tough on crypto.
Many crypto-mining regions in China are radically reducing operations.
Miners create new cryptocurrencies using a complex computer code in a complex process, which is highly energy intensive and requires a lot of computer power.
Authorities in the China's southwest province of Sichuan ordered crypto-mining projects to close earlier this summer.
It followed on from Beijing declared war on Bitcoin mining and trading as part of a series of measures to control financial risks.
Iran has also banned the mining of cryptocurrencies including Bitcoin for nearly four months because the country faces major blackouts and mining uses lots of power.
Meanwhile, poster adverts for cryptocurrency platform Luno have been banned in the UK for failing to mention the risk of Bitcoin investments.
The first signs of trouble for the crypto market came in May, when Elon Musk released a statement saying Tesla would no longer accept Bitcoin for purchasing vehicles.
The Tesla founder has previously caused currencies to spike in value by mentioning them on Twitter or in press statements.
Posting to his personal Twitter account, he wrote: "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel."
Bitcoin then started plummeting within minutes.
Other cryptocurrencies quickly followed, with several of the mainstream coins seeing a huge drop in value.
Coins took another big blow in April when Turkey's central bank banned the use of cryptocurrencies for purchases.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
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