This week has been quite turbulent in the crypto-world. I will break it down so we can make sense of the big swings that happened. We will use the picture below to match the event to the chart.
We entered the week at around 750 billion USD in total market cap of cryptocurrencies and managed to reach the all-time high of over 830 billion USD. The biggest contributors were as usual BTC, XRP and ETH, gaining over 70 billion USD in market cap (combined).
XRP was sitting at 122 billion USD market cap at the start of the week. There was a rumor floating around that Coinbase will be adding XRP. On 4th of January, Coinbase posted a blog post regarding this rumor. Next day we saw XRP lose around 12 billion USD market cap but just for a few hours, then the rally continued with XRP reaching around 135 billion USD on January 7th.
ETH entered the week strong with its price over 1000 USD for the first time amid mass adoption news and Ethereum network transaction numbers vastly exceeding that of Bitcoin network. ETH was continuing its really reaching over 1200 USD and gaining around 25 billion USD in market cap on 10th of January.
Then on January 8th, Coinmarketcap.com, the website most of the people invested in cryptocurrencies visit just about every day, decided to change the way it displays certain cryptocurrency prices. Read more about it in our blog post here. This decision whipped off around 50 billion USD in total market cap immediately (#1 on the image above). There were a lot of cryptocurrencies directly affected by this action.
Bitcoin (BTC) lost around 30 billion USD in market cap with displayed price dropping from around 16.500 USD to 14.200 USD in a single day. Ripple’s XRP saw around 20 billion USD wiped off and displayed average price dropping from 3.20 USD to 2.60 USD.
Let me point out again that Coinmarketcap’s decision was the right one but it should have been communicated better and before the change was made.
That leads us to the second part of the drop (#2 on the image above). The sudden drop in displayed price on Coinmarketcap and other factors resulted in a panic selloff which lead to another huge loss in total market cap. We saw the whole market lose around 150 billion USD.
By the end of the day, the smoke cleared and the buying started again. Total market cap managed to get back to the level from the start of the week and was floating between 700 and 750 billion USD until 11th of January (#3 on the image above). The news came out on just about every single media that South Korea which is an important player in cryptocurrency trading is about to ban the trading. Read more here. It didn’t take long for the market to respond and another panic selloff began. South Korea addressed this issue a couple of hours after the news and stopped the FUD. Read more here.
Selloff ended but not without consequences since we are sitting at 713 billion USD total market cap at the time of writing, which is almost 15% lower from this week’s all-time high.