One asset class always on the risk of a pullback following the heady gains of 2017 is cryptocurrency.
Those mouth-watering gains created uneasiness among the trading community concerning a potential bubble-in-the-making. The lack of regulation and the astronomical gains posted by each of the digital currency left traders with a constant fear as to when a reversal would materialize.
Following a small pullback in late December, most cryptocurrencies pushed ahead with renewed vigor in 2018, at least temporarily allaying fears of skeptics.
Recent Pullback Spoils The Party
Even as market participants were breathing easy, the cryptocurrency universe experienced a setback, with most of them seeing a sharp pullback today.
- From a high of around $14,277 on Monday, bitcoin pulled back and recently traded around $12,206, a retreat of about 15 percent. It's now at its lowest level in about six weeks.
- Ethereum, meanwhile, experienced a 20 percent plunge to a low of around $1,096.
- Ripple's currency token the Ripple XRP has been on a downtrend since Jan. 7, losing about 57 percent of its value since then. From Monday's high of $1.79, it lost about 25 percent before ticking up slightly.
- From a near-term high of $263.77 on Sunday, Litecoin fell by about 25 percent to a low of $197.66.
- The NEO has lost about 15 percent to $155.73.
What is Unnerving Crypto Traders
The retreat is primarily due to fears concerning a crackdown by Asian regulators. Specifically, South Korean regulators are looking to clamp down on cryptocurrency exchanges, with the nations Finance Minister Kim Dong-yeon reportedly suggesting that a ban on cryptocurrency trading is still very much a live option.
The Chinese have already cracked the whip on the crypto, banning its trading. The Russians are also contemplating such a move.
Can the newest asset class in town withstand regulatory fears and push ahead? Trading in the coming days will offer cues regarding whether the setback is a blip on the radar or a sustained trend.
Benzinga does not provide investment advice. All rights reserved.
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