3 Reasons Behind Cryptocurrency Price Crash

The price of Bitcoin and other cryptocurrencies have continued to fall following last week's market-wide decline. While some analysts struggle to explain why, AtoZMarkets gives 3 reasons behind cryptocurrency price crash.

November 20, 2018 | AtoZ Markets - Like a house of cards, the flagship cryptocurrency, Bitcoin collapsed on Monday, crashing below $5,000 per coin. The crypto market sell-off or meltdown as some may call it continues at full speed after the downfall that happened on November 14th then came the crash of November 19th. Today, November 20th is no better.

So far, November has been a horrible month for Bitcoin, which has seen the price plummet to a low not seen since late 2017, when the price rallied to $20,000 per coin before collapsing rapidly.

Why Bitcoin And Cryptocurrency Prices Plummet: 3 Reasons to Consider

What is the reason behind the current price drop? AtoZMarkets carried out an extensive research and discovered that three recent events might explain the current price collapse.

1# SEC Crackdown on ICO

The first reason is the announcement made by the US Security Exchange Commision (SEC) on Friday that two ICO startups, Paragon Coin and CarrierEQ, also known as Airfox broke the law by failing to register their Initial Coin Offerings (ICOs) as securities. Both firms conducted token sales back in 2017 in which Airfox raised $15 million, while Paragon raised $12 million through its sale.

The companies have been asked by the Commision to refund the money to investors and must also pay fines. As a result, there is a fear that other companies that have also raised funds through ICOs will face something similar.

Some analysts have even noted that this is just the beginning. Crypto bros spent almost the whole of 2017 poking the SEC bear, at the moment, the bear is awake and is prepared to wreak havoc. This recent development is enough to terrify some crypto investors to sell their digital assets.

We have also discovered that another reason for the rapid sell-off was the lack of a Bitcoin ETF. At the moment, the federal watchdog has not shut the door on the demand for such an instrument but is yet to give their approval, a move that would simplify mainstream investment.

2# Bitcoin Cash Hard Fork Battle

The second possible reason for the crypto crash was the mess surrounding last week’s Bitcoin Cash (BCH) fork that eventually tanked the market. BCH, which was birthed by hard fork of Bitcoin back in August 2017, now has its own hard fork. The competing forks are currently busy with hash wars, with some crypto exchanges warning of issues with one of these spin-offs.

This story hurt the price of Bitcoin Cash, and possibly dampened the whole crypto-sphere. Forking presents a major threat to the crypto industry due to the dilutive effects that accompany it. The reason for the decline is the lack of investor confidence in the currencies. In other words, no institutional investor or trader will want to own a currency that is likely to crash in the future.

3# Nvidia Discouraging Third-Quarter Report

The third possibility is the Nvidia third-quarter report that was released on Thursday which tells a story of what's happening in the cryptocurrency industry. Crypto investors panicked after the third-quarter revenues of the chip-makers Nvidia and Advanced Micro Devices missed the expectations and show a steep sales declines for cryptocurrency equipment.

This report shows a dwindling interest in cryptocurrencies and that the price is unlikely to rally anytime soon. This, however, explains the chill on the prices of the crypto assets.

Bloomberg Analysts Call for $1,500 per Bitcoin

In the meantime, the crypto market is not driven by positive news, it's excessively influenced by a series of negative news because we're in the bear market. Last week, Bloomberg analysts shared their Bitcoin's price prediction saying that it could fall to as low as $1,500.

In contrast, Rob Sluymer, an analyst at Fundstrat Global Advisors argued that it will take “weeks, if not months” for the price of the number one digital currency to rebound from the “technical damage.”

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