Earlier today, on October 18, the cryptocurrency market endured a major correction, as the price of Ethereum fell by 10 percent and Bitcoin declined by over 5 percent.
Within the past 24 hours, the price of Ether, the native cryptocurrency of Ethereum, fell from $340 to $299, while the price of Bitcoin fell from $5,550 to $5,380. Nearly all cryptocurrencies in the market including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Dash, and NEM recorded losses of over 5 percent, with Ripple recording the largest decline in value at 12.56 percent.
Factors For the Recent Decline, Indicators of Recovery
Coincidentally, cryptocurrencies that recorded a major decline in value such as Bitcoin, Ethereum, and Ripple have demonstrated significant developer activity and achieved important milestones in the past few weeks.
Ethereum for instance, recently completed its Byzantium hard fork successfully and as Ethereum co-founder Vitalik Buterin noted, the Ethereum blockchain network has been relatively stable subsequent to the completion of the fork.
Ripple secured a partnership with the Gates Foundation, which entails the integration of the Ripple blockchain network to settle mobile payments through the Ripple interledger technology. Earlier this week, the Gates Foundation revealed the development of Mojaloop, a mobile payments platform in partnership with Ripple, Dwolla, and Modus Box, which is expected to power banking systems and financial networks in regions like Tanzania with poor banking infrastructures.
Shi Yaohong, the President of Software Product LIne at Huawei stated:
“In order to achieve the full potential of mobile money, we must evolve today’s complex and often fragmented digital payments ecosystem. I look forward to exploring opportunities to leverage Mojaloop to help us achieve our goal of bringing digital financial services to all poor and low-income customers.”
Bitcoin has also been at an optimal position to initiate another strong rally, primarily due to the rapidly increasing demand from institutional investors in major regions such as the US and Japan, and the decline in support for SegWit2x.
Within the past two weeks, major mining pools such as F2Pool have stopped signaling support for SegWit2x, while large Bitcoin communities in South Korea, Brazil, and Argentina have rejected the hard fork in November.
While it can be said that supporters of SegWit2x would purchase more Bitcoin to obtain SegWit2x coins or B2X by the end of November, the majority of traders and investors at invest in Bitcoin at this phase are more likely to have invested in the digital currency to demonstrate their confidence over the short and mid-term growth of Bitcoin.
Despite Optimism, Why Did Major Cryptocurrencies Decline in Value?
Ethereum, Ripple, and Bitcoin have sustained an upward momentum for a relatively long period, since the beginning of 2017. Ripple has secured partnerships with leading financial institutions like Sweden’s SEB Bank, and Ethereum has also seen success in development and in the Enterprise Ethereum Alliance consortium.
But, within a two-week period, the price of Bitcoin and most of the cryptocurrencies in the market have increased rapidly, without major corrections. Bitcoin has increased from $4,500 to $5,600, while Ether rose from $270 to $340.
The recent correction of Ethereum, Ripple, Bitcoin, and other cryptocurrencies in the market would allow the global cryptocurrency market to stabilize and restructure, building a better platform to rebuild momentum and initiate strong rallies.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:11 AM UTC