Written by Crypto Guru
In just a matter of 24 hours, cryptocurrency markets with Bitcoin in the lead, saw a whopping $60 billion getting wiped off their values on Thursday. Nearly every cryptocurrency at the top of the pile was headed south. This major collapse was triggered by multiple factors including closer scrutiny of the space by regulators, Google announcement regarding banning crypto related advertisements and a large selling by a trustee of Mt.Gox, the crypto exchange that is now defunct. Bitcoin however staged a mild recovery later in the day to get past $8,000 to $8,219.77.Consequently, the market cap of all cryptocurrencies has been pushed down to $331.7 billion.
Bitcoin was not expected to suffer from the Google announcement
When Google announced its decision to ban cryptocurrency related advertisements, it was expected that Bitcoin would remain unscathed since it does not rely significantly on advertisement and has an inherent strength of its own. However, Bitcoin lost about 10% in a single day and plummeted by as much as 40% from its January, 2018 prices.
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Regulators getting more and more concerned
In another related development in the U.S., the Financial Services Committee in Washington was engaged in a hearing on ICO and cryptocurrency markets. Chairman of the sub-committee stated that he intended to push for enhanced oversight.
Another report from Allianz, a European company in the financial services sector echoed the bubble nature of Bitcoin and other cryptocurrencies adding that the fair value of bitcoin, in their opinion should be zero.
Regulators elsewhere around the globe have also been sending out strong signals on measures on the anvil to bring cryptocurrency markets and ICOs within the ambit of regulation in respective nations.
Series of scams
Yet another reason for the present state of cryptocurrency markets including Bitcoin is the series of scams in the ICO market. According to a recent CNBC report, scammers have made good with more than $2 million through apparently fake ICO. An ICO helps start-ups in raising investment through crowd-fund instead of knocking at the doors of venture capitalists. Companies can offer an ICO allowing people to invest in cryptocurrencies like bitcoin or ethereum and receive a new token from the start-up in exchange for the funds. The new token or digital coin does not constitute equity and can be exchanged for services offered by the company on a future date.Potentially, the new coin can also rise to a significantly higher price compared to the original investment.