After a minor dip in the crypto market during January we saw a continued contraction in the market as the market capitalisation dropped from all time highs in January of $830 billion down to a February 6th low of $279 billion. This represented a massive 66% drop in the market within 30 days. Although many commentators viewed a correction was needed, this level of reduction in such a short time frame caught many investors unprepared.
There were a number of factors that contributed to the reduction in prices across the market. The most prominent was the run up to December and January which saw an overwhelming amount of capital being injected into the market. This drove prices ridiculous high, to level where this type of buying pressure was never going to be able to maintain momentum over the medium trend. Outside of this, we had rumbles of China cracking down on cryptocurrency, credit card companies commencing to impose fees on customers purchasing crypto currencies with credit cards.
Other news included:
- State of Wyoming in the US Approves Utility Token Securities Exemptions Bill
- South Korea to Support ‘Normal’ Crypto Trading
- Bank of America Now Considers Crypto a Business Risk
- Venezuela Says Pre-Sale of Oil-Backed Petro Cryptocurrency Has Raised $735 Million
- Coinbase offers a new solution for e-commerce that accepts BTC, ETH, BCH, and LTC
- Bank of America is the Company with the Most Blockchain Patents
- Number of Cryptocurrency Hedge Funds Rises to 226 Globally
- Hong Kong Orders Exchanges to Delist Securities Tokens
- India’s Tax Department Issues Notices to 100,000 Crypto Investors
- Senate cryptocurrency hearing strikes a cautiously optimistic tone
On February 7th we saw the downward price pressure reverse which coincided with the senate hearing into cryptocurrency and the S&P 500 having heavy losses for the day. We feel this was the first positive news in relation to the crypto market for at least 3 weeks and the market reacted accordingly with the market cap returning to $450 Billion by the end of the month.