Digital currencies' $600bn wipe out signals new low

Sell-off in coins of all sizes reduced the market value of cryptos tracked by Coinmarketcap.com to about $230 billion, the lowest since November

An Ethereum coin representation. Crypto currencies are having a torrid time. Bloomberg

The 2018 selloff in cryptocurrencies plumbed new depths on Wednesday after the US Securities and Exchange Commission (SEC) dented enthusiasts’ hopes for an VanEck exchange-traded fund backed by Bitcoin.

A broad sell-off in coins of all sizes reduced the market value of virtual currencies tracked by Coinmarketcap.com to about $230 billion, the lowest level since November. Digital assets have now lost about $600bn since crypto-mania peaked in January, equivalent to erasing the entire market value of Visa twice over. (Shares of the payments processor are trading near a record high.)

The SEC postponed its decision on whether to approve the Bitcoin ETF, dealing a blow to bulls who had bet a green light from the regulator would help sustain last month’s tenuous rally. Optimists are counting on the wider adoption of cryptocurrencies to keep prices supported, but regulators and many institutional investors have remained wary amid concerns over security and market manipulation.

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Bitcoin was down 5.6 per cent to $6,484 as of 8:19am in New York, recovering from a 7 per cent drop earlier while extending its 2018 decline to 55 per cent, according to Bloomberg composite pricing. Ripple slumped 10 per cent while Ether and Litecoin sank at least 4.7 per cent. All but two of the 100 biggest virtual currencies tracked by Coinmarketcap.com slumped over the past 24 hours.

The SEC now has until September 30 to “approve or disapprove, or institute proceedings to determine whether to disapprove” a proposed rule change from Cboe Global Markets that would allow the listing of an ETF from VanEck Associates and SolidX Partners, the regulator said. An initial deadline was due to expire next week.

The regulator denied an exchange’s request to list a similar fund run by Tyler and Cameron Winklevoss late last month. Some had argued that VanEck’s proposal was more likely to gain approval thanks in part to plans for a high minimum share price that would discourage retail investors. The SEC received more than 1,300 comments on the proposed rule change as of August 6, it said.

News hasn’t been all negative this week for digital currencies and their acceptance by Wall Street. Goldman Sachs is considering a plan to offer custody for crypto funds, people with knowledge of the matter said.