Bitcoin is struggling but cryptocurrencies known as “alt-coins” were faring much worse on Tuesday.
XRP and Ethereum both dropped by more than 12 percent and the entire cryptocurrency market lost $19 billion in 24 hours, according to CoinMarketCap.com.
“The crypto market seems to have hit panic mode,” says Matthew Newton, analyst at global investment platform eToro.
Bitcoin has had a tough week but it was other, lesser-known cryptocurrencies leading the selling-spree Tuesday.
Ether, which is the second largest cryptocurrency behind bitcoin, was the biggest loser among the top five by market capitalization and fell more than 12 percent, according to data from industry site CoinMarketCap.com. Ether is down 65 percent this year and was trading near $260 Tuesday after starting the year above $760.
“The crypto market seems to have hit panic mode, with prices falling significantly across the board,” said Matthew Newton, analyst at global investment platform eToro. “As we can see in the case of Ether, investors seem to be increasing liquidations of their ICO holdings, with significant drops in price and increased volumes.”
XRP, the world’s third largest digital currency, dropped by 10 percent to about 26 cents. The digital currency is one of the biggest laggards this year, dropping roughly 90 percent after starting the year above $2.30, according to historical data from CoinMarketCap.com.
The entire market value of cryptocurrencies has tumbled 69 percent this year, and in the past 24 hours fell by $19 billion, according to the CoinMarketCap.com data. Bitcoin still makes up more than half of the cryptocurrency market, and has also struggled to recover to anywhere near its high near $20,000 in December. Prices have fallen more than 56 percent this year to about $6,000 Tuesday.
Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, said retail investors in general may be losing their risk appetite.
“When the market is down, the larger players in crypto have thinner pockets for alternative coins,” DiPasquale said. “The market is still majority retail investors who sell on lows.”
DiPasquale predicted that bitcoin will fall below $5,000 before staging a recovery in the fourth quarter.
Bitcoin and other cryptocurrencies had rallied last month after news of institutional interest from asset management giant BlackRock, as well as a collaboration between New York Stock Exchange owner Intercontinental Exchange, Starbucks and Microsoft on a digital asset platform.
Investors were also hopeful that the first-ever cryptocurrency ETF would be approved in August, which helped boost bitcoin above $8,000. But the SEC announced last week that it would postpone that decision. A second attempt by Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list their ETF wasrejected by the SEC in July.
Ripple owns about 60 percent of XRP on the market, and is officially the name of a San Francisco-based company developing a network for faster global financial payments. XRP is the name of the digital token that financial institutions on the network can use to transact quickly.
Ether was first launched as a fundraising effort to develop the blockchain platform Ethereum. The Ethereum blockchain is being used to build applications on blockchain, the technology first used and made famous by bitcoin. Ether prices got a boost in June after a key Securities and Exchange Commission official made it clear that in the eyes of the agency, it’s not a security.
The U.S. agency has not specifically commented on the status of other cryptocurrencies, yet top executives at Ripple maintain that XRP is “absolutely not a security.”