It’s been an awful 12 months to be a cryptocurrency speculator with many of the more popular rivals to the undisputed king of cryptocurrencies in Bitcoin producing some disastrous returns. While Bitcoin is down 75% in 2018 that’s nothing compared to some of the falls experienced by smaller cryptocurrencies. Take a look at some of the returns below:
- The Cardano price (ADA) is down 31% over the last week and has lost more than 90% of its value since its December 2017 peak
- The Monero price is down 30% over the last week and has lost nearly 90% of its value since December 2017
- The Tron price is down 28% over the last week and has lost more than 90% of its value since December 2017
- The Ripple price is down 5% over the last week and has lost more than 80% of its value since December 2017
- The Bitcoin Cash price is down 55% over the last week and has lost more than 90% of its value since December 2017
- The Litecoin price is down 26% over the last week and has lost nearly 90% of its value since December 2017
- The Ethereum price is down 28% over the last week and has lost nearly 90% of its value since December 2017
So what’s going on with the minor cryptocurrency prices?
The first point to note is that sentiment around digital currency valuations is generally led by the king of the cryptos in Bitcoin which has a market value around US$85 billion.
This is more than the next 9 largest digital currencies combined (including all of the listed above) and as such cryptos tend to move roughly in unison with Bitcoin which we know has consistently fallen through 2018.
The minor cryptocurrencies are also more volatile as they are less liquid than Bitcoin in having fewer overall buyers and sellers. As such small shifts in supply or demand can greatly exaggerate price movements, compared to Bitcoin that is “relatively stable”.
The digital currencies have also been falling for many other reasons, including:
- The upcoming forking of Bitcoin cash is reportedly causing problems within the crypto mining and administration communities that could lead to a race to the bottom
- Cryptos have not been widely accepted by regulators
- Sentiment that drives demand has turned bad
- Cryptos have not been widely accepted by banks or other large corporate enterprises
- Crypto exchanges have been the subject of high profile ‘hacks’ in 2018, leading to the theft of investors’ funds
Buying digital currencies is not for the feint-hearted given their wild price movements make the likes of AfterPay Touch Group Ltd (ASX: APT) look like stable blue chips.
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Motley Fool contributor Yulia Mosaleva has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.