The cryptocurrency market is a notoriously volatile one, and many virtual currencies have experienced a dip in price in 2018. This includes the major ones as well, such as Bitcoin, Ethereum, Ripple and Litecoin.
Perhaps the most notable is the number one cryptocurrency; Bitcoin. The digital currency has plunged by around $1,000, which is approximately 2% of its value. So, why is the price of Bitcoin as volatile as it is? One of the main reasons that they are under so much pressure is because of the new regulations that have been brought in by the Securities and Exchange Commission. They have recently announced that exchanges will now have to register as a national securities exchange. This has sparked fear though that more regulations could be introduced, which has reduced the value, causing the price to drop.
Another reason is because of the Coinbase announcement of introducing a weighted index fund for cryptocurrencies. When the ETF is launched it will help in reflecting major trends in the cryptocurrency market, similarly to how equity index gives a sense of what’s happening in the economy. This will only be available to customers in the US.
Finally, the Bank Of England has also issued a warning regarding the crackdown on cryptocurrencies, which includes Bitcoin. The banks have said that virtual currencies are not able to perform the most basic function of money, so the banks believe that by properly regulating them will reduce the amount of illegitimate activities.