Bitcoin, Ethereum, Litecoin, and Ripple, the largest crypto currencies by market cap, all slid from their highs almost 40% on Thursday, mostly reclaiming 20% of those gains. It seems investor’s fears of a complete collapse have not been realized.
Interestingly no currency was spared in the investor pullback, as all of the currencies followed an almost lock-step downward trajectory. Generally there are winners and losers when there are pullbacks, showing the investors appetite to realize gains and reallocate based on new market data. This time it wasn’t so.
These pullbacks are actually pretty common in the crypto currency community. Anybody who has kept their investments in Bitcoin for over 5 years have seen several large pullbacks. In the spring of 2013 saw their price fall from $233 to $67, a 71% drop. 2014 had the Mt. Gox calamity, which was when I heard about Bitcoin for the first time. It fell 49% then.
There are more examples of falls by the most dominant crypto currency, but it shows that it can happen, and that it will happen.
The Korean government recent glaring disapproval for crypto currencies’ volatility has put some investors on edge. China banned bitcoin in September, causing volatility then as well. That hasn’t stopped peer-to-peer transactions to occur in China, though at the time it led to some volatility then as well. Russia will soon join other countries in regulating blockchains.
Unfortunately, there will be more regulations and uncertainty as blockchain technology continues to evolve into the future.