The crypto market has experienced a selloff back on Thursday that affected most of the virtual currencies in the market. Indeed, the total market capitalization of cryptocurrencies reached $200 billion dollars, losing $25 billion dollars in just a few hours.
Some experts have linked the sell-off in the crypto market to the drop experienced by global equities. This is something very important since it shows that Bitcoin and virtual currencies did not work as a hedge against traditional financial markets.
According to Thejas Naval, an analyst at Element Digital Asset Management, the price drop in virtual currencies has nothing to do with the stock market.
On the matter, he commented:
“There’s a narrative that the crypto market was simply falling in lockstep with the equity markets, which are slowly entering into correction zones. We believe this move in cryptocurrencies had nothing to do with the stock market. “
Additionally, he said that evidence shows that there is little correlation between global stock indexes and the price of Bitcoin.
The most valuable virtual currency in the market, Bitcoin (BTC), has been traded close to $6,200 after the drop it experienced back on Thursday.
Ethereum (ETH) has also suffered the consequences of this sell-off. The second most known cryptocurrency in the market has been performing weakly over the last months. And this can be seen in Bitfinex. There are currently over 300 thousand short positions opened for Ethereum.
This could be related to Initial Coin Offerings (ICOs) selling their ETH positions in order to cover future losses and continue with the development of their projects. Ethereum is almost down 90% from its all-time high in January when ETH reached $1,400 dollars.
Despite the fact that Ethereum is performing poorly, the events hosted by the Ethereum community are growing and have an important number of attendees. In the near future, the crypto network could experience a new hard-fork in order to increase the efficiency of its blockchain. With it, Ethereum will be able to handle more transactions allowing users to pay fewer fees.
At the moment, Ethereum is being traded around $200 dollars and has a market capitalization of $20.6 billion dollars.