The prices of Bitcoin (BTC), Ripple (XRP) and Ethereum (ETH) bounced back overnight on Thursday, following heavy losses earlier in the week.
According to Coinmarketcap, the prices of the three largest crypto assets bounced more than 10%:
What’s Going On?
Earlier this week, a three-fold wave of negative news hit the crypto market, currently estimated to be worth an incredible $US 604 billion ($756 billion).
- Bloomberg reported that China is stepping up regulation and may even ban trading in cryptocurrencies altogether. China has the world’s largest community of Bitcoin miners.
- The South Korean Government plans to rein in trading, according to officials. Currently, South Korea is the number-one hotspot for trading in crypto assets.
- The first of the CBOE Bitcoin futures, which allowed large investors to bet against Bitcoin for the first time, expired earlier this week.
But it appears the bulls are back for now.
The Canadian arm of fast food deep fryer KFC has decided to accept Bitcoin, saying:
“KFC Canada presents the Bitcoin Bucket. Sure, we don’t know exactly what bitcoins are, or how they work, but that shouldn’t come between you and some finger lickin’ good chicken.”
Despite the enormous crypto selloffs earlier in the week, prices have snapped back. Ripple, which we covered in detail here, bounced back ferociously overnight climbing 46%.
“Ripple is certainly a highly speculative asset,” CryptoCompare CEO, Charles Hayter, was quoted as saying in Forbes. According to Hayter, the market for Ripple is much less liquid, which can compound big swings in prices. “it takes less trading volume to move XRP”, he added.
Less liquid markets with no regulation can sometimes give rise to market manipulation. Around $12 billion of Ripple changed wallets overnight, compared to $20 billion in Bitcoin, according to Coinmarketcap.
One commentator said Ripple’s price rise was a result of a ‘natural rebound’ following a steep selloff. Others suggested it had something to do with ‘technical charting’.
Without anyone appearing to have a logical explanation — and few market participants knowing how to value a crypto asset — the overnight rise in Ripple is a bit of a mystery.
However, one thing most experts appear to agree upon is the risk of putting too much capital into a digital ‘currency’.
“If you’re looking to trade digital currencies, make sure you understand what you’re doing and be ready to deal with massive price swings,” writes Chris Smith of BGR. “It’s also a good idea not to invest all your savings in crypto trading even if you’re incredibly confident in your knowledge of Bitcoin and other altcoins.”
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