Bitcoin dropped to an eight-week low on Tuesday, while Ethereum, the second-largest cryptocurrency in terms of market value, sank to a more than one-year trough as they continued their bearish trend, undermined by a strong U.S. dollar and global tensions related to Turkey.
The Turkish crisis has dampened risk appetite in recent sessions, spurring a sell-off in emerging market currencies and stocks and prompting inflows to safe-haven assets such as the dollar and U.S. Treasuries.
The original virtual currency fell as low as $5,880 on Bitstamp, the lowest since late June. It was last down 3.5 percent at $6,036.74. So far in 2018, bitcoin has fallen nearly 57 percent, after soaring more than 1,300 percent last year.
Ethereum plunged nearly 9 percent to $258.45 on Bitstamp, falling to a more than one-year low of $250.54. According to crypto data tracker coinmarketcap.com, the third-largest cryptocurrency, Ripple, fell 13.4 percent to 25 U.S. cents.
“What began earlier this week as a rout in the Turkish lira has quickly spread throughout all markets and now it seems to be affecting the cryptos as well,” said Israel-based Mati Greenspan, senior market analyst at eToro.
The total market capitalization for cryptocurrencies tumbled to $191.4 billion, the lowest since early November last year, coinmarketcap.com data showed.
Bitcoin has held up pretty well amid the sell-off in the cryptocurrency market, analysts said. As a percentage of market capitalization, bitcoin’s share rose to 54.5 percent, suggesting that investors were willing to hold the more widely held and well-capitalized digital currencies.
During the heady days of the cryptocurrency boom in late 2017 and January this year, bitcoin’s share fell to 32 percent.
The cryptocurrency market has been stung by several decisions by the U.S. Securities and Exchange Commision on exchange-traded funds.
Late last month, the SEC stood by its decision to block the ETF application of Tyler and Cameron Winklevoss, founders of crypto exchange Gemini Trust Co LLC.
Early this month, the SEC delayed a decision on a proposed bitcoin ETF submitted by money management firm VanEck and crypto startup SolidX.
“I believe we’re just witnessing the continuation of the cryptocurrency bear market. This is not the first or last cyclical asset to behave this way,” said Clement Thibault, senior analyst at Investing.com.
“Looking ahead, I don’t think we’re at the end of the cycle just yet and I can see bitcoin and other cryptocurrencies continuing to fall before a meaningful return back up.”