Cryptocurrency giant Bitcoin dropped below the $5,000 mark on Monday, far greater than the expected drop predicted last week which had the currency leveling out around $5,300. According to a report from Reuters, the coin is now at a 13-month low and is currently experiencing a massive sell-off, which started when a hard fork of Bitcoin Cash was announced earlier in the month. The so-called hard fork essentially split Bitcoin Cash into two different currencies running two unique operating systems. Currently, Bitcoin is trading at $4,608, down from its brilliant highs a year ago.
As with last week’s decline, smaller cryptocurrencies (also known as “altcoins”) shared the same fate and saw massive losses. Most notably, altcoins Ether and Litecoin both suffered hits as investors continued to purge their cryptocurrency wallets. Ripple fared the best, dropping only four percent. Fortunately, some altcoins appear to have stabilized in value during trading hours on Monday according to a report from Bloomberg.
While the hard fork may have been the catalyst starting the sell-off, a ruling last weekend from the Securities and Exchange Commission (SEC) against two developing altcoins could have made matters worse. Bloomberg reports that the SEC ordered new cryptocurrency companies Airfox and Paragon Coin Inc. to each pay a quarter million dollar fine after it was discovered both firms failed to “register their initial coin offerings as securities.” The companies will also have to bring their cryptocurrencies into compliance. The SEC’s tenacity in cracking down on cryptocurrencies has some fearing further punishment will be handed down to larger coins.
“It’s always suspect guessing the cause of short-term price movements, but it seems likely that a lot of what’s going on now is ICOs trying to liquidate all their cryptocurrency for cash to make off with the goods before the SEC comes down on them,” said Chia co-founder Bram Cohen during an interview with Bloomberg. Chia is a new cryptocurrency which is scheduled to hit the market soon.
As a result of the sell-off and price dive, the current market capitalization for cryptocurrencies is down by at least $30 billion, according to a report from CoinDesk. This loss has brought the market cap to a 13 month low. According to a report from The Street, this sustained loss is the longest losing streak in Bitcoin’s history. While no one is certain what will happen next, it is apparent that Bitcoin’s long period of stability — which the currency enjoyed earlier this year — is over.