It has been an awful week for altcoins. Peercoin broke parity and proceeded to lose a further 17 percent to hit $0.83. Bitcoin’s silver, Litecoin, hit a low of $4.85 today, a fall of $2.50 in 7 days. Namecoin lost over 20 percent from $1.54 to $1.27.
Peercoin Breaks Parity
After a short-lived holdout, Peercoin prices broke the important $1 figure on August 9th. In the next 3 days, the crypto lost an extra 17 percent to hit a multi-month low of $0.83. A week ago, I wrote that more losses may be on the way for PPC. Why is this happening and what’s behind the latest altcoins rout? Let’s look at the fundamentals.
There have been no major positive developments in Altcoinia for some time now. The latest ‘’good news’’ was the adoption of Litecoin by major Chinese bitcoin exchanges few months ago. Since then, no major retailers started accepting altcoins for payment, as merchant adoption has focused almost exclusively on bitcoin. In fact, even if merchants wanted to accept some of the more popular altcoins, there are no major bitcoin payment processors that are willing to take on that risk. The only payment processor that dabbles in altcoins is Moolah .
On the negative side, the May Ripple fiasco completely eroded confidence in altcoins. On May 22nd, Ripple’s project’s co-founder Jed Mccaleb announced that he will sell his entire stake. It was estimated that he owns around 9 Billion XRP, 9% of all XRP ever created, or nearly 100% of all XRP currently on the market. The shock announcement crippled Ripple’s value and its total market cap fell from 2 Billion to just over $30 Million ($42 Million now). For more on this, read my article ‘’Bitcoin Feeds on the Tears of Altcoins’’. The event showed just how easy is to crash the value of the smaller altcoins.
Upcoming US regulation may disproportionately hurt Altcoins
Another factor will be upcoming regulation in the States. On July 16th the New York State Department of Financial Services proposed strict new rules for virtual currencies. According to many cryptocurrency experts, the proposed regulation will stifle innovation in the US, if adopted as is. The hit on altcoins and altcoin related businesses will be disproportionately harder, due to their smaller size. As of August 12th 2014, bitcoin reigns supreme in the crypto space with a market cap of over $7.4 Billion. The next 10 cryptocurrencies have a combined market cap of less then $350 Million. While some bitcoin businesses may be able to comply with the new NY rules, for many altcoin companies the regulation may mean an end to operation in the US.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?