CRYPTOCURRENCY prices have plunged including major coins like Bitcoin, Ethereum, Solana, Cardano and Dogecoin.
The price of Bitcoin, the biggest cryptocurrency on the market, is now down by 7.8% and trading at $42,980.38 at the time of writing this morning (January 6) according to Coinmarketcap.
Today, the global crypto market is down 8.97% over the past 24 hours, with the biggest losers including big names like Shiba Inu.
The drop occurred after uncertainty in the wider US economic market was reported, with the US Federal Reserve discussing hiking interest rates in March sooner than expected according to CoinDesk.
The latest plunge follows a crypto crash at the start of December shortly after Bitcoin hit a record high of $69,000.
Of 100 cryptocurrencies listed on Coinmarketcap, the price of 97 fell.
Crypto markets were wiped by $1.5trillion after the December 4 crash, but the market has since recovered some of those losses.
One trader lost $5billion after the price of bitcoin plummeted, highlighting the risks of investing in crypto.
It was revealed recently that 90% of all bitcoins have been mined.
It comes as new research shows that 18.89million coins have been mined out of 21million, which is the maximum.
And in another recent blow to the market came as one of the biggest crypto exchanges, Binance, said it will close its trading platform in Singapore after clashing with regulators.
Earlier this year Binance was told to stop its activities in the UK by regulators.
Dogecoin’s rise came after billionaire Tesla entrepreneur Elon Musk said the cryptocurrnecy will be accepted as payment.
He tweeted: “Tesla will make some merch buyable with Doge & see how it goes”.
Early December’s crash was thought to be driven by mounting fears that global governments could crackdown on crypto regulation.
The crypto market has also been battered by India’s plans to ban all private cryptocurrencies – aside from a few exceptions – and launch a central bank-backed official digital currency.
Cryptocurrencies are highly volatile, meaning their values often make large swings with no notice, as the latest plunge shows.
Investing in cryptocurrency is a very risky business.
You can be left with less money than you put in, and could even lose it all.
You might not be able to access your investment if platforms go down and you could be left unable to convert crypto back into cash.
There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you don’t understand and you should never put in money that you can’t afford to lose entirely.
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Why have the crypto markets been down?
Cryptocurrencies have been especially volatile lately and there a few reasons why.
Twitter’s chief financial officer Ned Segal said investing in crypto “doesn’t make sense right now”, causing concern among Silicon Valley buyers.
China also announced plans to clean up virtual currency mining, according to CNBC.
Previous moves by the country to crackdown on mining and trading of crypto has previously sent markets plunging.
Meanwhile, US regulator the Securities and Exchange Commission (SEC), stopped a fund listing in November that would track the price of Bitcoin.
If successfully listed, the fund would have enabled investors to enjoy any gains – or suffer falls – in the price of Bitcoin, without having to hold the cryptocurrency directly themselves.
But the exchange traded fund (ETF) was rejected by the SEC, which is sceptical about the cryptocurrency.
Matthew Dibb, COO and co-founder of Stack Funds, told CoinDesk Bitcoin will likely fall further.
He said: “We have noticed some larger sales occur on Bitfinex as well as openings of new short positions.
“While liquidations so far are quite low by historical standard and funding rates are approaching flat, we could see a further cool-off in BTC for the short term as momentum is beginning to stall.”
Kunal Sawhney, chief executive officer of equities research firm Kalkine Group, told Yahoo Finance that a 5% to 10% correction was “quite normal,” given the surge in trading in the previous month.
The major cryptos have dropped before following a global sell-off in stock markets.
China also announced a ban on cryptocurrencies in September, when JP Morgan analysts also warned that the markets were due a correction following “retail investor mania”.
And in August, hackers stole $600million in a cryptocurrency heist after spotting a “vulnerability” in a blockchain site.
That came after a series of worldwide crackdowns on the cryptocurrency market, and another big sell-off in global stock markets.
Many crypto-mining regions in China are radically reducing operations.
Miners create new cryptocurrencies using a complex computer code in a complex process, which is highly energy intensive and requires a lot of computer power.
Authorities in the China’s southwest province of Sichuan ordered crypto-mining projects to close earlier this summer.
It followed on from Beijing declared war on Bitcoin mining and trading as part of a series of measures to control financial risks.
Iran has also banned the mining of cryptocurrencies including Bitcoin for nearly four months because the country faces major blackouts and mining uses lots of power.
Coins took another big blow in April when Turkey’s central bank banned the use of cryptocurrencies for purchases.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
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