XRP and Other Cryptos Dive As Their Red-hot Rally Comes to a Sudden Stop
XRP’s, the world’s third-biggest cryptocurrency, value has dropped by 20% on Thursday. This happened at the same time as Ethereum, the second-biggest cryptocurrency, dropped by 13%, and Bitcoin, the biggest, slumped by 13%, reaching its lowest since November 16.
This has happened after bitcoin rallied around 140% this year to reach a three-year high of $19,521 on Wednesday, shy of its all-time high of $19,666. A growth that has been fuelled by the boom in interest of new investors in cryptocurrencies since the pandemic left people on their homes in March of this year.
Since the pandemic started, Cryptocurrency believers enjoyed the soaring price of Bitcoin and other coins. They interpreted it as heralding evidence that mainstream investors are now becoming more convinced by the possibility of profiting from non-government regulated currencies.
This drop may have been caused when more investors started second-guessing the cryptocurrency’s recent surge and profit-taking towards the end of a volatile week.
Bitcoin’s 12-year history has been riddled with big gains and equally large drops. Its volatility has been why the currency’s use for payments has been hampered and made many larger investors more cautious.
“Bitcoin [is] giving us a timely reminder of the two-way risk that comes with volatile cryptocurrencies,” said Craig Erlam, senior market analyst at Oanda.
Analysts said that crypto investors were likely taking profit after Bitcoin neared its all-time high. At the same time, others speculated that this might have been caused by a tweet from Coinbase chief executive Brian Armstrong that triggered the sudden drop.
In his tweet, he said: “Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I’m concerned that this would have unintended side effects.”
The U.S. Treasury Department is yet to issue a reply to a request for comment regarding the matter.
Other analysts and investors cited worries about market players’ surrounding speculation because of tighter U.S. regulation of how individual investors keep their cryptocurrencies. And, Bitcoin has reacted volatilely in the past to these measures by American authorities.
Last month, U.S. prosecutors filed criminal charges on four founders and executives of crypto derivatives exchanges BitMEX for allegedly evading rules designed to stop people from laundering money.