The digital currency arena gave traders a bit of a scare in early August this year when for the first time in several weeks, the prices of many major assets – bitcoin among them – fell to new lows. BTC, for example, dropped below $29,000 for the first time in a while, sending all investors into a whirlwind of fear and concern.
Bitcoin Fell for the First Time in Weeks
Ethereum was the other major digital currency to dip alongside bitcoin. The second largest crypto asset by market cap lost close to 1.5 percent over a 24-hour period. Josh Gilbert – an analyst at the crypto firm e-Toro – commented on the situation and said:
Ethereum is sort of the king of DeFi and is viewed as one of the most important liquidity providers in DeFi. It is a massive project, so it’s not going to come under as much pressure as smaller alts, but that Curve issue is ultimately the reason we’re seeing weakness in Ethereum right now.
While there were many factors that appeared to contribute to the dips, it appears the leading element was the ruling of a federal judge, who stated that not every altcoin is like Ripple’s XRP. In other words, many of them are securities. This goes against the recent judgement in the SEC-Ripple lawsuit, which determined that XRP is not a security in all situations.
Even XRP was susceptible to the ruling given it fell by more than three percent, more than double the losses incurred by Ethereum.
Another leading factor was Curve Finance, a decentralized finance (defi) platform in the crypto arena. It was hacked by cyberthieves who implanted a bug in its smart contract programming language. The bug allowed the thieves to make off with more than $100 million in crypto funds. Gilbert discussed this situation as well and said:
We’ve unfortunately had this scenario in crypto a few times over the past 12 to 18 months. Whenever investors hear the word hack… it puts the whole crypto market on the backfoot, and that’s what’s happening here.
The Excitement is Going Out the Window
He also talked about the new bitcoin ETF application from BlackRock and said some of the initial excitement surrounding the product is beginning to wane. He said it’s likely a lot of time will pass by before an approval stamp is given, which could cause the price of BTC to fall in the meantime. He said:
We had a lot of buzz recently around the Blackrock ETF but that can only drive bitcoin for so long and for so far. We got plenty of optimism with it, but that initial optimism is fading slightly. When bitcoin heads south so do most altcoins… and they’re selling off a little bit further given what we’re seeing with Curve.