It has been a sobering couple of days for the whole cryptocurrency market after the biggest sell off in recent memory.
Bitcoin dipped below $7,000 for the first time since November marking a complete turnaround from the value that marked the start of a phenomenal bull run all the way up to $20,000.
But after positive statements from the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission Tuesday, the markets have had a complete turnaround.
In the space of a week, the overall cryptocurrency market capitalization (according to Coinmarketcap data) had dropped to $276.8 bln, losing over $100 bln in value in that timeframe before seeing gains of over $100 bln today.
Last week was marked by panic in the crypto market, no doubt from late investors that piled money into the markets amid the rapidly rising Bitcoin price late last year.
As a swathe of regulatory moves from governments and banks around the world caused uncertainty, people scrambled to sell in an effort to minimize losses.
On paper, it looked bad. But the cryptocurrency pull back has ironically overshadowed a far bigger stock market over the past week.
Crypto crash overshadowing massive stock market crash
Coinciding with the massive correction taking place in the cryptocurrency world, the global stock market has also been hit by a massive crash.
According to Reuters, the past week has seen over $4 tln of stock value has been wiped out.
Take a moment to reflect on that number. Global stock markets lost nearly 15 times the total cryptocurrency market capitalization in the space of seven days.
The cryptocurrency sell off, which has seen a $200 bln drop in value over the past two weeks, is not to be taken lightly but the scale of the sell-off affecting mainstream stock markets reminds us that cryptocurrencies have a long way to go in the grand scheme of things.
The global stock market crash is being attributed to high bond yields in the US for 2017, which led to fears of looming interest rate hikes and inflation.
Clarity through the FUD
A number of factors have influenced the cryptocurrency correction over the past two weeks. A number of big banks have banned the use of credit cards to buy cryptocurrencies, which naturally caused many of these buyers to exit the market to consolidate losses.
Coupled with an all-out crackdown from China and some misleading interpretations of the Indian government’s stance on cryptocurrencies has made the markets very uneasy. This has led to a spiral of selling, which seems to have cooled somewhat late on Tuesday, Feb. 6.
24 hours later, cryptocurrencies have recovered across the board. The SEC and CFTC can take credit after their positive comments on the future of cryptocurrencies.
In the wake of the market recovery, industry experts have now offered some fresh, optimistic predictions of highs in 2018.