CRYPTOCURRENCY markets are down after recording major gains and reaching all-time highs since the start of the year.
Bitcoin, ethereum and Ripple’s XRP are among the digital currencies that have dropped in value today.
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Cryptocurrencies are volatile which means the price can rise and fall sharply.
You can be left with less money than you put in and remember, you should never invest money that you can’t afford to lose.
There have also been warnings around scams related to cryptocurrencies.
Which cryptocurrency prices are down?
Bitcoin, the most popular cryptocurrency, had its biggest one-day drop in two months over the weekend and it’s the latest wild movement for the cryptocurrency.
Last week Bitcoin hit record highs, surging above $64,000 for the first time ever.
What is Bitcoin?
BITCOIN got you baffled? Here’s what you need to know:
- Bitcoin is a virtual currency
- It’s traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or “blockchain”
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Bitcoin is down nearly 4% in the last 24 hours and down nearly 10% over the past week, and is currently trading at $55,324 (£39,548) at the time of writing according to CoinMarketCap.
Ethereum, the second-largest cryptocurrency, also hit record highs last week rising to $2,547 and has since fallen.
Today it is trading at $2,143 at the time of writing, down just over 5%.
Other cryptocurrencies also down today are Ripple’s XRP and Tether.
Meanwhile Dogecoin, a cryptocurrency that initially started as a joke, is hovering around record highs of over $0.40 after rocketing more than 35% on Monday.
But analysts have warned that the Dogecoin “bubble has to burst”.
Why are crypto markets down?
Crypto markets have surged over the past year as interest increased among individual investors and well-known companies in the financial world.
Well-known mainstream companies such as PayPal, Mastercard, Facebook and Tesla have backed cryptocurrencies.
Last week’s surges came off the back of Coinbase going public – it is the first cryptocurrency exchange to become a public company and list its shares on a stock exchange.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
It’s seen as a major milestone and another sign of cryptocurrency becoming mainstream but its shares are now trading below the initial debut price.
And today’s market drop highlights how volatile cryptocurrencies are.
Bitcoin’s fall over the weekend was down to a blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining according to CoinMarketCap.
It also follows a decision on Friday by Turkey’s central bank to ban the use of cryptocurrencies for purchases.
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From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
Mastercard will allow payments in cryptocurrencies like bitcoin later this year.
Rishi Sunak is setting up a taskforce to explore the option of launching a UK digital currency dubbed “Britcoin”.
What is the cryptocurrency Dogecoin?
