Cryptocurrency Market Loses $16 Billion As Bitcoin Plunges Below $8,000 Again
The cryptocurrency market is witnessing a plunge amid an unexpected sell-off on the last day of July.
At the time of writing, the BTC/USD pair has taken a reverse and is sitting at $7,735 representing a loss of 4.98% in the last 24 hours. Most altcoins are replicating the movement of the biggest cryptocurrency as the total market capitalization dropped by $16 billion during the past six hours. Among the top ten cryptocurrencies, EOS has recorded the highest loss after dropping 11% to trade at the $7.23 levels at the time of writing.
The overarching declines have come unexpectedly and it is not clear that is the reason behind the fall. However, most of the losses were made during the last six hours, following reports of another bitcoin swing by New York Times columnist Paul Krugman. In a recent report, the economist claimed that bitcoin and other digital currencies represent a 300-year economic regression and will “likely” experience a “total collapse.”
The economist noted that he is skeptical of digital assets mainly because of “transaction costs and the absence of tethering.” In his post, Krugman states:
“Set against this history, the enthusiasm for cryptocurrencies seems very odd, because it goes exactly in the opposite of the long-run trend. Instead of near-frictionless transactions, we have high costs of doing business, because transferring a Bitcoin or other cryptocurrency unit requires providing a complete history of past transactions. Instead of money created by the click of a mouse, we have money that must be mined — created through resource-intensive computations.”
He went ahead to say that virtual currencies are taking the financial system 300 years back in the name of “celebrating the use of cutting-edge technology.” In addition to that, he said that cryptocurrencies “have no backstop, no tether to reality. Their value depends entirely on self-fulfilling expectations – which means that total collapse is a real possibility.”
It is unclear what could have led to the slide in Bitcoin price and other digital assets, but Paul Krugman’s report is likely to have been a catalyst. So will that collapse occur? Krugman, on his part, thinks that it will, though he says that it’s possible, if unlikely, that bitcoin could endure as a black market-asset.