[Photo: Edvard Munch’s famous painting ‘The Scream’]
Today is a bloodbath once again in the markets. It is so bad that only the famous Edvard Munch’s painting can summarize the feeling all of us crypto traders have. We just want to scream our lungs out. Ripple (XRP) is down to a new low of $1.12 at the moment of writing this. Stellar (XLM) has not been spared and is trading at $0.49. NEO, my other favorite coin that almost weathered the storm like NEO from the matrix, is trading $143 after reaching an early week high of $171. It is terrible out there ladies and gentlemen. And we will have to HODL so we can weather the storm.
Even Litecoin (LTC) has not been spared in this early morning Massacre. It is currently trading at $163. A 56% drop from its December 19th high of $372.
So what is causing the storm?
There is a lot of FUD on cryptocurrencies right now so please allow me to highlight a few that could be affecting the market.
Firstly, facebook announced that it will no longer support cryptocurrency and ICO related advertisements. This means it has banned all ads on Cryptocurrencies (including Bitcoin) and ICOs. This is a major blow to marketing the possibilities about crypto. But according to the facebook team, such ads are usually very misleading and out to get the money of the facebook users and eventually conning them. Facebook has gone ahead and incorporated a new policy to make sure such deceptive ads will no longer plague its site and those of instagram and its ad network, Audience Network, which places ads on third-party apps.
Such a move by a social media giant probably caused panic selling. Maybe many traders thought that this could be a move foreshadowing extra regulation from the American based SEC. But I do applaud facebook’s concern about fraudulent ads out to con facebook users.
A second reason the cryptocurrency markets are dipping is the current hack of over $530 Million from the Japanese exchange known as Coincheck. This is a humongous amount to disappear from an exchange. The news is so huge that it has made it all the way to CNN. This is serious media coverage for a story to reach CNN. This means the audience is larger. This means that anyone with cryptocurrencies lying about in Exchanges, probably started selling or even withdrawing the coins into cold storage. (One can easily store coins offline using a Nano S or Trezor device.)
With the occurrence of such a bold heist, the Japanese authorities want to start doing random inspections on Japanese exchanges to guarantee they are secure. Their goal is to safeguard the investments of the citizens of Japan: a mandate by every government.
Such a move could most likely lead to their government planning new regulation for cryptocurrency exchanges. It might take some time to get such laws drafted but the $530 Million hack might be the catalyst and genesis of regulation in Asia. Such news can clearly cause the markets to tumble to the point of traders wanting to scream!
A third possible reason for the drop in the markets, is the Subpoena by US regulators on Bitifinex; a major cryptocurrency exchange with a daily trade volume of approximately $2 Billion. The Subpoena is aimed at targeting the connection of Bitfinex to the founders of a coin known as Tether. This is because Tether claims to have all its coins backed by USD held in a reserve somewhere. The company has not provided any proof of this through its holdings and this could trigger an audit. Skeptics wonder if the money is really there. An audit is bad news for a company. And this can cause a domino effect on the cryptocurrency markets.
In summary, the market is really bad today. It is so bad that a grown man like myself might want to scream. The reasons for the massive dips can be attributed to facebook banning all crypto and ICO related ads on its website, on instagram and its ad network, Audience Network. Also, the hack of Coincheck has left traders and Japanese authorities shaken by such a brazen act. On top of these two reasons is the Subpoena on Bitfinex by the US regulators.
It is bad out there!
But this could be an opportunity to buy more coins at a cheap price! Yes?