Crypto Market Erases $200 Billion In Market Value In 24 Hours; Regulator Warns Investors Could ‘Lose All Their Money’

Crypto Market Erases $200 Billion In Market Value In 24 Hours; Regulator Warns Investors Could ‘Lose All Their Money’

Updated Jan 11, 2021, 01:46pm EST Topline After a more than 100% surge over the past month, the cryptocurrency market is taking a massive hit Monday as regulators and other experts sound the alarm on bitcoin’s booming rally, but not everyone’s convinced the bearishness is warranted.
Key Facts As of 10:30 a.m. EST, the value of the cryptocurrency market has tanked to about $900 billion from a high of $1.1 trillion early Sunday morning, according to crypto data firm CoinMarketCap .
The world’s first and largest cryptocurrency, bitcoin, is behind much of the decline, falling 17% over the past 24 hours—wiping out about $125 billion in market value.
Other top tokens are also plunging, with ether, XRP and litecoin down 21%, 16% and 25%, respectively.
“As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in,” the United Kingdom’s Financial Conduct Authority, which regulates financials in the country, said Monday , also issuing a stark warning: “If consumers invest in these types of product, they should be prepared to lose all their money.”
The price plunge started Sunday after a report by the United Kingdom’s Sunday Times shed light on the enforcement measures banks, including HSBC, are taking to bar transfers from cryptocurrency exchanges in the country.
Venture capitalist and longtime bitcoin supporter Tim Draper railed against the measures, tweeting early Monday that “banks don’t like bitcoin because it makes them less relevant” before issuing a bullish forecast that bitcoin prices will hit $250,000 by early 2023; bitcoin is currently trading at around $32,750.
Crucial Quote: “Bitcoin often exhibits large upside swings that tend to be followed by corrections—this is normal behavior for a new technology in the early stage of its adoption curve,” Anatoly Crachilov, the cofounder and CEO of crypto investment manager Nickel Digital, said Monday, adding that the market is positioned for expansion as institutional adoption soars. “Only professional investors with a long-term view on the underlying technology should have exposure to this asset class. They also need high-risk tolerance levels and, importantly, to never lose sight of the forest for the trees.”
Chief Critic Bank of America Securities Chief Investment Strategist Michael Hartnett warned that bitcoin looks like “the mother of all bubbles,” on Friday, noting that its roughly 1,000% surge since the beginning of 2019 has been fueled by “violent” inflation, akin to the short-lived surges of gold prices in the late 1970s and tech stocks in the late 1990s.
Surprising Fact Before crashing 80% by the end of 2018, the price of bitcoin, which first launched in January 2009, climbed fifteenfold in 2017 amid a flood of heightened attention and surging mainstream adoption, as retail trading became easier through pioneering bitcoin platforms like brokerage Coinbase.
Key Background The cryptocurrency market’s massive rally has been fueled in large part by inflation concerns and institutional adoption. Investors have been eyeing regulatory approval of a bitcoin exchange-traded fund, but JPMorgan warned Friday that such a development may actually hurt bitcoin prices in the short term as investors cash out of the Grayscale Bitcoin Trust, an SEC-approved bitcoin price-tracking fund that many have turned to in lieu of an ETF.
Further Reading As Bitcoin, Ethereum, Ripple’s XRP And Litecoin Lose Billions, Watchdog Issues Stark Crypto Price Warning (Forbes)
SEC Charges Ripple With Selling $1.3 Billion In Unregistered Securities, XRP Loses $2 Billion In Market Value (Forbes)
Jonathan Ponciano
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism
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I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at [email protected]

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