Bitcoin Plunges Another 10% to Start February
After a 25% plunge in January, leading cryptocurrency bitcoin (BTC-USD) is down another 10% on the first day of February. Ethereum (ETH-USD) and other cryptocurrencies are deep in the red as well. Despite the across-the-board drop, there is little major news responsible for the decline, which could be a troubling sign for investors.
Today's cryptocurrency prices -- a lot of red ink
Here's a look at the 10 largest cryptocurrencies by market capitalization, and how much each has changed over the past 24 hours.
As you can see, cryptocurrencies are getting hammered across the board. In fact, you'd have to look all the way down the list to the 46th-largest cryptocurrency (DigixDAO) before you'd find one that's in the green today.
After today's decline, bitcoin (BTC-USD) trades for less than half of its December peak of nearly $20,000.
Is the crypto-bubble bursting, or is the market just taking a breather?
There are two things that concern me about today's cryptocurrency price movements. First, the decline is sharp and across the board. Second, there isn't any major news that should warrant such a decline. In other words, when South Korea announced that it planned to crack down on cryptocurrency trading, the resulting decline made sense. In the absence of major news, however, a one-day plunge of 10% is a bit more concerning.
One news item today was a story out of India that the government plans to take "all measures" to remove cryptocurrencies from the payments system, in order to combat money laundering. Even so, this isn't as big of a deal as the South Korea news was, and that moved the market less. India has previously made its views on cryptocurrencies clear, comparing the crypto market to a Ponzi scheme.
There have been a few other negative news items in the past day or so -- for example, Facebook announced that it is banning cryptocurrency advertising on its site -- but nothing that should cause such a plunge.
A rough day for altcoins
It's also worth noticing that bitcoin (BTC-USD) and Ethereum (ETH-USD) are the two best performers in the top 10. Many alternative cryptocurrencies, or altcoins, are getting crushed. Just to name a few: Ripple, Cardano, and Stellar, which were some of the best-performing cryptocurrencies of the late-2017 rally, are all down by 15% or more for the day.
Simply put, the atmosphere in the cryptocurrency markets right now seems to be pessimistic. In recent weeks, there have definitely been more negative headlines than positive ones; the reverse will likely need to be the case for the crypto market to resume its upward trajectory.
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Matthew Frankel has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has no positions in any cryptocurrencies mentioned. The Motley Fool owns shares of and recommends FB. The Motley Fool has the following options: short March 2018 $200 calls on FB and long March 2018 $170 puts on FB. The Motley Fool has a disclosure policy.