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Blockchain Semantics Blog Why are Cryptocurrencies Sinking?

Why are Cryptocurrencies Sinking?

By Swati Keswani | April 4, 2018, 1:43 p.m. GMT

In late January, bitcoin dropped by 12% after Facebook made an announcement that it would likely ban all ads that promote cryptocurrency or an ICO. The same story seems to be building up in the biggest profiteers from cryptocurrencies as well.

Some of the biggest falls:

All major cryptocurrencies are facing major falls in their prices. Bitcoin once touched the peak of $19,783 is now at $7,881 and Ripple, once at $3.43 is now at $0.58. Ethereum and Litecoin are also suffering major falls.

McCaleb’s view

Jed McCaleb, the co-founder of Ripple and CTO of stellar, dramatized the decentralization of payments. His futuristic view on blockchain technology is that it will change banking industry by making a ledger everyone can access but not tamper with.

Possible reasons behind this major slump:

  1. Facebook banning cryptocurrency ads:

At the start of 2018, Mark Zuckerberg said some positive statements about cryptocurrencies in a Facebook post. He spoke about potential benefits the cryptocurrencies would have for social media businesses like Facebook as well as the power they have for people.

On January 30, a mere two weeks after he spoke so highly of cryptocurrencies, Facebook announced the ban on cryptocurrency related advertisements on their platform. As soon as Facebook declared a ban on cryptocurrency ads, the price of almost all top cryptocurrencies faced a major fall.





  1. Twitter banning ICO ads

Just a few days ago, another social media giant, Twitter, announced its ban on ICO ads on its platform,”We have added a new policy for Twitter Ads relating to cryptocurrency. Under this new policy, the advertisement of Initial Coin Offerings (ICOs) and token sales will be prohibited globally.” While the verdict isn’t in yet, the market awaits the result of this ban with baited breath.

  1. Stock Market:

If you look at the bitcoin and stock market graphs, you may be able to track some similarities between the trends in both cases. The stock market was continuously growing until 2018 until it also caught Donald Trump’s attention, who tweeted about how it had risen 20% since he was elected. Just before the start of 2018, bitcoin was touching new heights $20,000.However, both the bitcoin and stock markets then started to slump, with bitcoin suddenly heading towards $6,000 before hitting a floor of $20,000, followed by the stock market.

  1. Negative News and Rumors:

Cryptocurrencies are not categorized as legal or illegal, hence there exists a huge risk of investing in it. Rumors and unreasonable statements by regulators have been one of the major reasons behind the price crash.

The stream of rumors started from South Korea when the local authorities were thinking to ban cryptocurrency exchanges, followed by news coming in from India. Though this was a misinterpretation of the statement made by one of the Indian regulators about the “ban on cryptocurrencies”, it was about the regulator's strict eye on illegal activities that could be associated with cryptocurrencies. Misinterpretation or not, the panic in the market has contributed heavily to the downfall of the value of cryptocurrency.

  1. Buyers are not ready to buy expensive cryptocurrencies:

If we want bitcoin to grow, there should be someone ready to buy your bitcoin for higher and higher prices. On top of that, the statement of the Indian Finance Minister declaring that cryptocurrencies can become a catastrophe and that there is no need for circulation of cryptocurrency in this country is holding people back from investing in it.

These are just some of my assumptions on the cause of a steady fall of cryptocurrencies and their value in the market.


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