The sudden drop in cryptocurrency  

   Yesterday everyone gaped at the sudden drop in the value of the stock market, in what is being called the US stock market sell-off. The Dow Jones Industrial Average, and S&P 500, dropped more than 1% by morning, but the surprising thing was that cryptocurrency fell too.   

   At the end of what has been a rough year, it looked like the cryptocurrency market was finally starting to stabilize. Bitcoin had been staying consistently around the 6 500 US mark. However, yesterday Bitcoin dropped 7%, and now at the time of writing this, it is sitting at 6188 US. Etherum, Bitcoin Cash, and Ripple were hit even harder losing around 10% of their value.   

  There have been many speculations as to what caused this drop in the cryptocurrency market. Quartz said that some possible reasons could be that an article was posted recently saying that the cost of the energy used in mining bitcoin sometimes is outweighing the profits, or that investors have some risk aversion.   

 

  David Thomas, from GlobalBlock, told The Independent  

  “There was a growing feeling that bitcoin was a 'digital gold' asset and as such should weather such wider storms as equity market volatility. The fact that this hasn’t happened is interesting as it suggests to us that more and more seasoned investors with wider portfolios are getting into cryptocurrencies and are using similar equity strategies to manage their positions.”     

                                               

                                            Photo by rawpixel on Unsplash  

    People have wondered for some time if cryptocurrency was starting to follow the stock trend. It does make sense that the more that investors, who have traditionally traded in stocks, invest in crypto, the more the crypto market will follow the stock market. But is that a bad thing?   

  With the number of countries that are starting to create their cryptocurrency, or adding blockchain technology into government administration, it makes sense that more investors are taking notice. Especially, considering the practical applications that have been in development this year alone with everything from Dubai soon making it so a student can pay school fees with cryptocurrency, to Starbucks working towards accepting cryptocurrency.   

  With more investors and big-name stock market investors, getting into cryptocurrency that will only make the cryptocurrency market expand.   

  Although the news of the sudden drop is sad, it is a sign of the times, and hopefully with it, will come growth.