Cryptocurrency market hits 10-month low

Digital currencies decline as US regulators suspend trading in two securities linked to digital assets

FILE PHOTO: A cryptocurrency mining computer is seen in front of bitcoin logo during the annual Computex computer exhibition in Taipei, Taiwan, June 5, 2018. REUTERS/Tyrone Siu/File Photo
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The cryptocurrency bear market plumbed a 10-month low after Bitcoin’s biggest rival tumbled and US regulators suspended trading in two securities linked to digital assets.

Ether, the second-largest virtual currency, slumped 8.9 per cent from its level at 5pm New York time on Friday, according to Bloomberg composite pricing. Bitcoin lost 2.1 per cent, while the market capitalisation of digital assets tracked by shrank to $197 billion - down about $640bn from its January peak.

Cryptocurrencies have declined for five of the past six weeks amid concern that a broader adoption of digital assets will take longer than some had anticipated. That worry was underscored over the weekend after the US Securities and Exchange Commission temporarily suspended trading in two exchange-traded notes linked to cryptocurrencies and Ethereum co-founder Vitalik Buterin said that the days of explosive growth in the blockchain industry have likely come and gone.

“The temporary suspension of these products led to an initial knee-jerk reaction,” said Ryan Rabaglia, head of trading at cryptocurrency dealing firm OSL in Hong Kong. “But ultimately, it’s just another obstacle for the market to overcome.”

Cryptocurrencies remained under pressure on Monday despite reports that Citigroup has developed a new mechanism for investing in the space. The US bank plans to act as an agent issuing so-called digital asset receipts, or DARs, to enable trading by proxy without direct ownership of the underlying coins, a source said.

The Bloomberg Galaxy Crypto Index of major virtual currencies dropped 4.1 per cent to 392.68 at 8:28am in London, heading for its lowest close since mid-November. Ether fell to $199.05 and Bitcoin slipped to $6.313.51.

Ether has tumbled faster than Bitcoin in recent months on concern that blockchain-related firms are cashing out of the second-biggest cryptocurrency. Many start-ups that raised Ether from investors in their initial coin offerings (ICOs) will eventually need to sell their holdings to cover expenses like salaries and development costs.

“The rhetoric around ICOs continuing to unload their raise proceeds on the market remains valid,” Mr Rabaglia said. “It’s hard to see how that story line will go away any time soon.”