Bitcoin’s bear market is dragging other cryptocurrencies down with it

Short circuit.
Short circuit.
Image: Reuters/Dado Ruvic/Illustration
We may earn a commission from links on this page.

The bear market in bitcoin isn’t letting up, as the original cryptoasset has fallen to its lowest level in more than two months. What’s more, other digital assets like ripple and bitcoin cash have tumbled further—down more than 70% from their peaks—as regulatory scrutiny of the budding sector increases around the world.

Bitcoin was down about 8% at the time of writing, to around $7,618, its lowest level on a closing basis since Nov. 15, according to Coindesk and prices. Bitcoin has lost more than half of its market value since peaking at more than $19,000 in December. Among other better-known digital assets, ripple has fallen the most, dropping about 69% this year.

Cryptocurrencies have caught the attention of top-ranking officials around the world, and not in a good way. Governments are concerned that these assets could be used for money laundering and fraud and are pushing for the G20 to formulate a response. Regulators in South Korea, a hot spot for the burgeoning market, have taken steps to restrict buying and selling.

Bitcoin and its cousins could be a victim of their own success, with attention and volumes rising at a pace that the systems, regulations, and technology underpinning the market can’t support. Amid the mania, this has raised thorny questions about security, controls for manipulation, and internal accounting within parts of the crypto infrastructure.

Hacks and thefts remain a problem. South Korean authorities blamed North Korea for stealing cryptocurrency by hacking into its exchanges, according to CNBC. Japanese watchdogs recently raided Coincheck, a crypto exchange in Tokyo where some $500 million of digital assets was stolen. And questions surrounding tether, a digital token that is purportedly tied to the dollar, have intensified after the company cut ties with its auditor. Tether and the Bitfinex exchange, which share a CEO, are being probed by US watchdogs, according to Bloomberg.

Of course, cryptocurrencies aren’t the only assets taking a tumble of late. Stock markets from Asia to Europe and the US have fallen as economic growth accelerates and central bankers, particularly in America, contemplate raising interest rates more aggressively than previously anticipated. Still, the pain has been much more severe in the riskiest assets, like bitcoin, as investors seek cover in familiar havens like gold.