The decline continued through the end of last week, as more Chinese currency exchanges announced plans to close their services. The price of bitcoin hit a fresh 6-week low, falling to below $3,000 for the first time since earlier this year. And ethereum dipped to below $200 for the first time since July.
From $180 Billion to $99 Billion
All told, the decline in value brought the total cryptocurrency market cap across all tokens and currencies to just $99 billion. After reaching an all-time high of $180 billion on September 2, the market has declined by almost half.
It seems that the bulk of the reason behind the recent drop was that China’s regulatory environment is being revealed as less stable than investors previously thought. After rumors swirled for days, a number of the most prominent digital currency exchanges in China announced plans to suspend trading. (See more: Is China’s Bitcoin Ban Good News for Hong Kong?)
BTCC, which is the world’s longest-running cryptocurrency exchange, was among them, citing plans to end trading on September 30. Yubi and ViaBTC also plan to close up shop, and Huobi and OKCoin will close down in October 2017. (See more: China’s Ban on Bitcoin Exchanges Was Not Fake News After All.)
36% Decline in One Week
Bitcoin’s price dropped by 36% over just 7 days, after falling another 17% last Friday. The last time that Bitcoin was priced below $3,000 was in early August of this year.
It’s important to note, however, that the price of bitcoin has resurged considerably this week. As of this writing, one bitcoin is worth nearly $4,000 – a significant gain on Friday’s price – although not back to the all-time record set at the beginning of September. It seems that extreme fluctuation is to be expected for the cryptocurrency.
On the other hand, because traders dependent on Chinese exchanges were able to quickly sort out other means of remaining engaged in the cryptocurrency space, the news of the Chinese government’s crackdown seems to have had a relatively short-lived impact on cryptocurrency prices, at least for the time being. (See more: Bitcoin Could Reach $50,000 Says Wall Street Analyst.)
Of course, there are likely longer-term implications of the ban as well, particularly if other countries follow China’s lead and consider revising their regulatory stances on digital currencies. Still, the space has proven surprisingly resilient, even in the face of game-changing news.