Many are predicting that Bitcoin still has further to fall and may drop to $3,000 or lower. Photo:  Reuters/ Bobby Yip
Many are predicting that Bitcoin still has further to fall and may drop to $3,000 or lower. Photo: Reuters/ Bobby Yip

The mass selloff of digital currencies has continued over the weekend as a third rout sent markets to their lowest levels for well over a year.

Many had speculated that Bitcoin would bottom out at $6,000 – and for a while it did. Markets settled down and the mass volatility abated for a while. Then, late on November 14, a digital avalanche started and markets plunged rapidly, breaking new year-lows time and time again.

Several things were blamed for sparking the crash. Firstly, the US Securities and Exchange Commission (SEC) always gets fingered for its constant crackdowns on initial coin offerings (ICOs) and what it deems to be securities trading. This would have had a negative impact on Ethereum but may not have been the cause of a 40% market crash.

There has been an ongoing battle between opposing factions of a Bitcoin Cash, which resulted in the blockchain splitting into two. Both spawned chains that suffered their own technical problems, which caused that particular coin to lose almost 50% of its value in a week.

Then there is always the looming threat that blockchain projects that raised funds in Ethereum last year and early this year would start dumping it and flooding the market. According to reports, however, this has already happened and sent Ethereum spiraling to its lowest level for 18 months, around $100.

Since mid-November Bitcoin has plunged almost 44% from $6,400 to $3,600, a new low it hit yesterday. This has dragged the entire digital currency market down with it, as Bitcoin is often the driving factor for market sentiment. In less than a fortnight total crypto-currency market capitalization has shrunk by over $90 billion, which equates to over 40%.

The weekend saw no letup as markets nosedived again in what has been described as a third wave selloff. On Sunday market cap hit a new 2018 low of $114 billion according to analytics website, which is back to where it was in August 2017 before the big ramp-up sent prices to the moon.

Many predict that Bitcoin still has further to fall and may reach $3,000 or lower, wallowing on a bottom for the best part of 2019 before it shows any signs of a recovery. What can be observed, however, is that this is not a new phenomenon for the digital currency space as similar market crashes have occurred several times over the past decade.

Bitcoin and its brethren have always recovered, but it might be a matter of if not when this time around.