Cryptocurrency Market Cap Lost $13 Billion In 3 Hours On Thursday

The cryptocurrency market saw all major tokens fall by almost 5 percent Thursday, wiping out about $13 billion from the market cap. Bitcoin was trading at $6,595 at 7:45 p.m. EDT and fell to $6,300 by 10:30 p.m. EDT, a sudden drop in its price after being stable for almost three weeks.

The slide of bitcoin led most other cryptocurrencies and tokens to also fall. Ethereum fell by 11 percent, XRP (ripple's cryptocurrency token) by 12 percent and other currencies in the top 10 ranking — by market cap — fell between 7 to 10 percent, as tracked by CoinMartketCap.

The overall market cap was $217 billion at 7:32 p.m. EDT and fell to $204 billion by 10:15 p.m. EDT. Interestingly, this fall came after an overnight drop in stock values in Wall Street.

David Thomas, director and co-founder of GlobalBlock, a cryptocurrency brokerage firm in the United Kingdom, suggested this kind of volatility in the cryptocurrency market could indicate that more "seasoned investors" with wider portfolios are getting into cryptocurrencies and are using similar equity strategies to manage their positions.

“Having seen global stock markets take a battering in the last 24 hours on trade fears and rising interest rates as well as the price of gold and the VIX Volatility Index heading higher, it is strange that we now see the crypto market also following suit. There was a growing feeling that Bitcoin (BTC) was a 'digital gold' asset and as such should weather such wider storms as equity market volatility," Thomas told International Business Times.

Bitcoin and other cryptocurrencies are usually seen as assets that would bypass the limitations of traditional stocks, because their price movements are not linked to other commodities and the wider economy. This has attracted institutional money into the crypto asset space, and according to Thomas, "this move indicates a high correlation between equities and cryptos, so if the stock market rout continues, then we could see further weakness in BTC."

"Financial markets tend to fall a lot faster than they rise and when the equity markets see a move of this magnitude, perhaps there is a tendency to also flatten positions in crypto assets to clear the decks completely. The key support levels to watch to the downside are $6,140 and $6,000,” Thomas explained.

This fall was also followed by warnings pertaining to the risk associated with crypto assets in a report released by the International Monetary Fund earlier in October.

"Cybersecurity breaches and cyberattacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system," the World Economic and Financial Survey report read.

Ethereum now stands at $191 (11:50 pm EDT). Earlier this week there were predictions that the currency would move upward and might even overtake bitcoin in the near future. Vitalik Buterin, cofounder of ethereum said Wednesday on Twitter he predicted a financial crisis between now and 2021.

Most cryptocurrency traders hoped 2018 could also the 2017-end pattern repeat in the market and bitcoin price would surpass the $19,000 mark it set in December.

On Tuesday, Rob Sluymer — head of technical research at Fundstrat Global Advisors — issued a warning in a research note shared with MarketWatch: “Investors should remain patient and wait for evidence of an improvement in ‘trend’ before increasing exposure. A move above the September real and relative highs remains the key resistance/reversal level that will need to be exceeded to signal the early stages of a trend reversal."