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Bitcoin Plunges Another 10% to Start February

By Matthew Frankel, CFP® - Feb 1, 2018 at 4:26PM

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Most other cryptocurrencies are doing even worse.

After a 25% plunge in January, leading cryptocurrency bitcoin (BTC-USD) is down another 10% on the first day of February. Ethereum (ETH-USD) and other cryptocurrencies are deep in the red as well. Despite the across-the-board drop, there is little major news responsible for the decline, which could be a troubling sign for investors.

Today's cryptocurrency prices -- a lot of red ink

Here's a look at the 10 largest cryptocurrencies by market capitalization, and how much each has changed over the past 24 hours.

Cryptocurrency Name (Code)

Price in U.S. Dollars

Day's Change

Bitcoin (BTC)

$8,992.00

(10.6%)

Ethereum (ETH)

$1,016.10

(7.9%)

Ripple (XRP)

$0.94

(15%)

Bitcoin Cash (BCH)

$1,250.00

(15.5%)

Cardano (ADA)

$0.40

(18%)

Stellar (XEM)

$0.44

(15.6%)

NEO (NEO)

$119.00

(16.5%)

Litecoin (LTC)

$135.35

(15.4%)

EOS (EOS)

$9.86

(13.5%)

NEM (NEM)

$0.64

(14.9%)

Data source: Investing.com. Prices and daily changes as of Feb. 1, 2018 at 2:45 p.m. EST; prices are rounded to the nearest cent where appropriate.

As you can see, cryptocurrencies are getting hammered across the board. In fact, you'd have to look all the way down the list to the 46th-largest cryptocurrency (DigixDAO) before you'd find one that's in the green today.

After today's decline, bitcoin (BTC-USD) trades for less than half of its December peak of nearly $20,000.

Stacks of gold coins bearing the bitcoin symbol

Image source: Getty Images.

Is the crypto-bubble bursting, or is the market just taking a breather?

There are two things that concern me about today's cryptocurrency price movements. First, the decline is sharp and across the board. Second, there isn't any major news that should warrant such a decline. In other words, when South Korea announced that it planned to crack down on cryptocurrency trading, the resulting decline made sense. In the absence of major news, however, a one-day plunge of 10% is a bit more concerning.

One news item today was a story out of India that the government plans to take "all measures" to remove cryptocurrencies from the payments system, in order to combat money laundering. Even so, this isn't as big of a deal as the South Korea news was, and that moved the market less. India has previously made its views on cryptocurrencies clear, comparing the crypto market to a Ponzi scheme.

There have been a few other negative news items in the past day or so -- for example, Facebook announced that it is banning cryptocurrency advertising on its site -- but nothing that should cause such a plunge.

A rough day for altcoins

It's also worth noticing that bitcoin (BTC-USD) and Ethereum (ETH-USD) are the two best performers in the top 10. Many alternative cryptocurrencies, or altcoins, are getting crushed. Just to name a few: Ripple, Cardano, and Stellar, which were some of the best-performing cryptocurrencies of the late-2017 rally, are all down by 15% or more for the day.

Simply put, the atmosphere in the cryptocurrency markets right now seems to be pessimistic. In recent weeks, there have definitely been more negative headlines than positive ones; the reverse will likely need to be the case for the crypto market to resume its upward trajectory.

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