If you look at the value of cryptocurrencies this morning, many are in positive territory.
Bitcoin (BTC) is up 4.6%. Ethereum (ETC) is up 6.9%. Ripple (XRP) is up 8%.
That’s a stark difference from the last few days, which wiped out billions in cryptocurrencies. Now, there’s hope that many of our favorite coins have finally bottomed out. But the question that remains is why was the sell-off so severe. While it’s been difficult to pinpoint an exact reason, here are some of the key factors that may have contributed to the carnage.
Concern Increases That ICOs Are Cashing Out
ICOs using the Ethereum blockchain are seen as one of the main catalysts for sending Ether’s price surging. Now, they’re being blamed for its decline. In fact, some argue that ICO projects may have been converting reserves into fiat currencies to meet financial obligations.
“These startups are raising a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market,” said Biswa Das, an analyst at BloomWater Capital, as quoted by Bloomberg.
Delay on U.S. SEC Decision on Bitcoin ETF
It’s quite possible that herd mentality has played a major role in downside. As investors watch their favorite cryptocurrencies decline, they become fearful and jump on the bandwagon. Much of this occurred after the U.S. SEC delayed its decision on a Bitcoin ETF.
However, many analysts still believe the resulting sell-off was an overreaction.
We have to consider that the SEC only pushed its decision date back to September 30th, 2018. This gives them more time to address potential risks. Plus, there’s no reason for rejection, as pointed out by SEC Commissioner Hester Peirce. She has made it very clear there is “no reason to not allow” the ETF.
Instead, according to Crypto Disrupt, “she believes the proposed change is not only consistent but that the SEC,” but, “went beyond its jurisdiction with the decision. She believes the focus should have been on the market where the ETF product would be traded rather than the less relevant issues of price manipulation within the cryptocurrency market.”
U.S. Dollar Flexing Over Cryptocurrencies
Analysts have also noted that U.S. dollar strength may be a contributing factor, too. In fact, over the last few days, the dollar has gained considered momentum. That may make it appear more attractive than cryptocurrency.