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WSJ: Bitcoin Crash Hampers Offerings of Altcoins

WSJ  |  Rob Williams

Bitcoin

The 70 percent plunge in Bitcoin’s price since a December peak is having a chilling effect on other digital currencies known as “altcoins,” The Wall Street Journal reported on Wednesday.

That marks reversal from last year, when the surging prices for cryptocurrencies spurred greater appetite for initial coin offerings. More than $4 billion was raised last year in public sales of bitcoin-like tokens. ICO projects raised $911 million in January, down from a record monthly figure of $1.6 billion in December.

Bitcoin hit a recent low on Tuesday, alongside the value of many altcoins. EOS was down as much as 67 percent since Jan. 13, when it hit a record high of $18.37. TRON, which started trading in September, was down 92 percent since Jan. 22. OmiseGo dropped 71 percent since Jan. 9. ICON was down 75 percent since Jan. 30. Even an “old” coin like Augur, down 69% since Jan. 12, wasn’t immune to declines.

More established coins also lost value. Ether, the currency used on the Ethereum network, was down 60 percent since Jan. 13. Ripple fell 84 percent since Jan. 4. Bitcoin Cash dropped 82 percent since Dec. 20. Litecoin was down 71 percent since Dec. 19.

“The recent weakness in bitcoin stems from tightening liquidity and near-term profit taking, and does not reflect a change in the long-term outlook for the digital currency,” John Sarson, managing partner at Blockchain Momentum LP and ETF Momentum Investing in Indianapolis, told Reuters. “We view this selloff positively as we believe that lower prices will entice institutions to act quickly to adopt enhanced digital asset services before prices recover.”

Stocks also faced selling pressure as investors grew concerned that the Federal Reserve would responding to a strengthening economy with rate hikes intended to damp inflationThe Dow Jones Industrial Average started falling on Feb. 1, along with many cryptocurrencies. Bitcoin slid to as low as $5,960 on Tuesday before rebounding. Wednesday morning, it traded at about $8,263, up nearly 40 percent from its lows but well below its record high of $19,783.

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