Currently, prices aren’t necessarily dropping but there has been a recent crypto market correction. The crypto market tends to drop when there is negative press or news about governmental regulations involving cryptocurrencies. In a situation like this, the whole market lost more than half of its total market capitalization because of a series of negative events, news, rumours, and government decisions.
As a result, January 2018 was the worst month in the last 3 years in percentage terms. The market lost over 30% in January and dipped even more in February.
However, as of today (as you can see on the above chart) the crypto space is recovering and most of the top tokens are restarting their uptrends.
Why was there such a big correction? Here’s the news that had the greatest impact:
South Korea - Rumours started to show up online saying that South Korean government might ban crypto trading just like China did in September last year. The crypto community reacted immediately, as South Korea is one of the biggest players in the market in terms of trading volume. However, it turned out that the local authorities only discussed several new rules but showed no real intention to completely ban the market inside its borders. Korean Financial Services Commission asked crypto exchanges to stick to the real-name transaction system. The Finance Minister confirmed that the country wouldn’t shut down crypto exchanges.
China - Even if China has banned local crypto exchanges back in September, trading tokens was still possible via peer-to-peer systems and other methods. However, at the beginning of February, China announced that it would completely remove every trace of crypto trading from its territory. It means that no individual will have the right to trade virtual coins. This news had a visible influence on the market. China also announced that it wants to get rid of the Bitcoin miners on its territory.
India - at the beginning of February, the Finance Minister of India stated that the government didn’t consider cryptocurrencies as a means of payment and hinted that it might try to ban crypto trading.
Other bad news came from the Netherlands, where the Finance Minister revealed that important officials from this crypto-friendly country discussed the Bitcoin ban. In Japan, crypto exchange Coincheck lost over $500M after a hack. Different regulatory bodies from the US and Europe came with warnings and notices against Bitcoin and the crypto market.
The situation seems to balance right now but we’ll have to wait and see what’s next.