3 Key reasons why cryptocurrency prices are dropping

Presently, digital currency market's value is falling. Why cryptocurrency prices are dropping? Market experts believe that there are three main reasons. Will cryptocurrencies depreciate more? Will Ethereum price rise again?

17 July, AtoZMarkets If you are watching the cryptocurrency market, you surely do know about the recent drop in the cryptocurrency market value. Overall, prices of digital currencies have slid by 64 percent, thus bringing the cryptocurrency market capitalization down to $70 billion from $110 billion.

3 Key reasons why cryptocurrency prices are dropping

Just like this, the price of Ethereum has dropped to $151 in about a month. This has caused major panic across the markets, leading investors to sell their assets.

Bitcoin has depreciated 36 percent from its high above $3,000 back in June. Therefore, some of the investors cannot cope with such low prices of cryptocurrencies. The harshest hit was taken by the cryptocurrency market newbies – they have purchased the digital coins at a much higher price.

Today, we will discuss the key reasons why cryptocurrency prices are dropping. Will cryptocurrencies depreciate more? Or will the digital currency market bounce back and turn to a green territory? Let’s find out.

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The upcoming cryptocurrency market split

Currently, the digital market is experiencing quite a dispute. The debate about the increase in the Bitcoin block size is in place for some years as of now. The key representatives of two opposing fronts: Bitcoin miners and nodes.

According to the industry experts, on the 1st of August, we could witness a split. While one part of the Bitcoin protocol supports a change in the protocol, another half would prefer to stick to the current protocol. As some of the industry experts expect, such split could cause a massive Bitcoin depreciation.

Such scenario makes investors nervous, while some of them are liquidating their Bitcoins into fiat. This could appear as of the reasons why cryptocurrency prices are dropping.

Moreover, if Bitcoin value will fall, the kind of cryptocurrencies will take the majority of digital currencies with it. Thus, the investors of all cryptocurrencies feel threatened by the 1st August.

ICO “startups” will cash out

A big number of blockchain based firms have raised millions of US dollar in Ethers through initial coin offerings (ICOs). Some of them have managed to do so even without having any product. Almost $700 million of capital was raised in total in June through ICOs.

According to the market experts, some of these startups could immediately cash out. Of course, there are serious firms that will hold onto Ethereum in the long-term. However, some of the startups were just looking for a way to make a quick buck.

In case these firms will cash out, it could cause honest firms to liquidate their Ethers and hold their funds in fiat due to lesser volatility.

Combination of market manipulation and panic sell

As we all know, the cryptocurrency market has no regulation. Hence, it is no surprise that some of the big digital market currency players tend to manipulate the markets. They do so for their own profit.

Thus, it is already an ordinary practice for people to run bots to trade cryptocurrencies. However, new coming investors want to make quick profits. As soon as the prices will start falling, these investors start to panic sell.

As a result, the combination of market manipulation and panic selling can appear as a reason behind the price fall. While one might believe that markets are going through long-term growth corrections, others say that there is a chance for further depreciation.

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