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Cryptocurrencies slump as market value plummets in 24 hours

Billions of dollars wiped off cryptocurrency value in market swings in 24 hours prompting speculations that the market is probably cooling off before the next leg up.

GP: Bitcoin value drops
Digital coins plunged by nearly 10% on Friday wiping over $260 billion off the value of the cryptocurrency market.

Ethereum fell to $2,202.05, down more than 11%. XPR, the fifth-biggest cryptocurrency plunged over 22%, according to price tracking site CoinMarketCap.

It was unclear what triggered the sell-off, though cryptocurrencies are known for their wild price swings.

“The market has run up quite a bit overall, and it’s probably cooling off before the next leg up,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC by email.

This year alone, bitcoin has risen 71% and ethereum has rallied 200%. Part of that support has been because of increased buying of bitcoin by institutional investors. And companies, like Tesla and Square, who acquired Billions of dollars worth of bitcoin too.

There’s also a steady encouragement by banks, who also trying to allow their clients to get involved in the bitcoin market. In March, Morgan Stanley said it was launching access to three funds that enable ownership of bitcoin.

However, concerns over a regulatory crackdown on bitcoin continues to cloud the market. Jesse Powell, CEO of a major cryptocurrency exchange called Kraken, warned governments could roll out sanctions on the use of bitcoin and other cryptocurrencies.

Authorities around the world are looking into how to regulate digital currencies.

India is planning to introduce a law to ban the trading or even ownership of cryptocurrencies, Reuters reported last month. In February, U.S. Treasury Secretary Janet Yellen called bitcoin a “highly speculative asset” and expressed worry about potential losses for investors.

The Deputy Governor of the People’s Republic of China, last week, called bitcoin an “investment alternative,” marking a more progressive tone on cryptocurrencies after a fiercely pursuit of crackdown on the industry in 2017 and 2018, by the country’s regulators.

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