5 Reasons for the recent crypto market correction
We explore some of the reasons why the cryptocurrency market has lost significant market cap over the past couple of days:
1. US Congressional Hearing: There was a congressional hearing held by the House Financial Services Subcommittee where popular media has reported mixed reactions among the US lawmakers on cryptocurrencies and ICOs. This may have lead to a deep correction in the prices of cryptocurrencies like Bitcoin which had fallen to a monthly low of $ 7783 as per CMC prices yesterday.
2. Ban on crypto ads by major tech companies: The recent spate of bans and clean up of cryptocurrency & ICO advertisements by companies like facebook, Google, Twitter may have pushed the cryptocurrency prices down.
Google recently announced in their Financial Services policy update post that ads that serve “cryptocurrency and other related content” will not be allowed on search engine results from June 2018.
This had come after a ban on advertisements by facebook in January 2018 where they had banned cryptocurrency and ICOs advertisements as well.
3. SEC Plans on Crypto Exchange Registration: The SEC in a statement on March 7th held that If a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.
This was coming after SEC Chairman Jay Clayton who reportedly told a group of lawyers in November that he hasn’t seen a single ICO that doesn’t have the “hallmarks of a security.”
They are also concerned of the fact that because they havent reviewed the operational aspects of these exchanges like trading protocols and listing processes, these exchanges may not meet the standards required by the SEC from securities listing exchanges. and would face significant penalties.
This affects how exchanges like Bittrex, Poloniex and Shapeshift would function and the scrutiny on these exchanges would have given traders the jitters.
4. SEC Crackdown on Crypto Hedge Funds: Michael Arrington, founder of Techcrunch had given a warning on what was to come for the crypto hedge funds in the US in a deleted tweet.
This was followed by a subpoena on his hedge fund ArringtonXRPCapital as well on 80 other hedge funds as well.
2017 was the year of the crypto hedge fund. According to Bloomberg, almost 220 crypto hedge funds have risen from the US alone which manage around $3.5 billion. But the problem was that a number of these hedge fund managers may not have the necessary background required to run it successfully. Many were just reportedly plain con artists and had duped investors of their money.
If you are looking for a hilarious view of this topic, here is your answer:
Also, a lot of dealings which may have been in conflict with SEC standards for securities had come into the light.
have seen a lot of investors exchange marketing / use of their social capital for a discount. wrote a token disclosure policy for @DCGco as a result – highly recommend having a similar policy for personal investing. will write a post on disclosure. https://t.co/VBzyJbpNF6
— Meltem Demirors (@Melt_Dem) February 18, 2018
5. Mt Gox never ceases to haunt crypto: According to Cointelegraph, a Mt. Gox bankruptcy trustee Nobuaki Korayashi may have been the reason for this 3 month downward trend where he may have sold $400 million worth of BTC & BCH in the open market leading to the downward trend.
Special mentions goes to FUD about South Korean regulations, Japanese scrutiny on exchanges and failed hack on Binance etc.
In short, its been a terrible, horrible, no good, very bad month for bulls.
Image Source via Hacked
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