Nearly $13 billion wiped off of cryptocurrency market as major coins plunge

The price of major cryptocurrencies plunged on Thursday with nearly $13 billion of value being wiped out in a matter of hours.
At around 10:23 a.m. HK/SIN, bitcoin had fallen nearly 5 percent to $6,303, while XRP and ethereum both tanked over 10 percent, according to data from Coinmarketcap.com. It's not unusual to see bitcoin lead other digital tokens lower.
In just three hours, nearly $13 billion of value had been erased from the entire cryptocurrency market.
The drop comes amid fresh warnings from financial authorities about the rapid growth of digital coins and the potential threat to the economy.
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.
Yu Chun Christopher Wong | S3studio | Getty Images
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.
The price of major cryptocurrencies plunged on Thursday with nearly $13 billion of value being wiped out in a matter of hours.
At around 10:23 a.m. HK/SIN, bitcoin had fallen nearly 5 percent to $6,303, while XRP and ethereum both tanked over 10 percent, according to data from Coinmarketcap.com. It's not unusual to see bitcoin lead other digital tokens lower.
In just three hours, nearly $13 billion of value had been erased from the entire cryptocurrency market.
The drop comes amid fresh warnings from financial authorities about the rapid growth of digital coins and the potential threat to the economy.
"Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system," the International Monetary Fund said in a recent report.
Many cryptocurrency enthusiasts hoped 2018 would be a year that regulators warmed up to the idea of professionalizing the trading of digital assets through new financial products like exchange-traded funds. But the U.S. Securities and Exchange Commission has rejected several ETFs including a highly anticipated one planned by the Winklevoss twins. Other countries, including China, have come down hard on cryptocurrencies.
At the same time, the year has been marked by high-profile hacks on cryptocurrency exchanges as well as a number of scams tied to people carrying out so-called initial coin offerings.
All of those factors have meant that bitcoin, XRP and ethereum have not recovered to the record highs seen toward the end of 2017 and beginning of this year. On Thursday, bitcoin was more than 68 percent off of its record high of $19,783.21, which it hit on Dec. 17 of last year. Asian markets were broadly lower on Thursday after Wall Street slumped on a heavy selling of technology and internet stocks.
Japan’s benchmark fell by an unusually wide margin of 3.9 percent and China’s main index lost 4.3 percent. Markets in Hong Kong, South Korea, Australia and Southeast Asia recorded similar declines.
Investors are wary of possible further U.S. interest rate hikes. That will raise the cost of corporate borrowing and could drag on economic growth.
The U.S. Federal Reserve recently raised short-term interest rates for the third time this year, with one more expected before the year ends. Strong economic data and a positive outlook from Fed officials have led to a sell-off in U.S. Treasury bonds, particularly longer-term ones, sparking concerns about even higher interest rates.
On Wednesday, President Donald Trump said the Fed “is making a mistake” with its campaign of rate increases. “I think the Fed has gone crazy,” he charged.
Stephen Innes of OANDA said that Trump’s comments have put pressure on the dollar but “the severity of this equity rout could bring the hawkish Fed narrative into question.”
“If the Feds are crazy, this market reaction is bordering on insanity, as so many negative crosscurrents collide that is merely impossible to find a glint of optimism,” he added.
The Dow plunged more than 800 points Wednesday, its worst drop in eight months. Rising bond yields have been drawing investors out of the stock market. The best-performing stocks over the past year took some of the biggest losses. (Oct. 10)
Sentiment also has been dampened by the spreading U.S.-Chinese tariff fight over Beijing’s technology policy. The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.
Tokyo’s Nikkei 225 gave up 3.9 percent to 22,591.10 and the Shanghai Composite lost 4.3 percent to 2,607.44. The Kospi in South Korea fell 3.6 percent to 2,148.97. Australia’s S&P/ASX 200 slipped 2.4 percent to 5,906.00. Stocks plunged in Taiwan and fell across Southeast Asia.
U.S. stocks slumped on Wednesday as concerns over rising interest rates and trade tensions caused a sell-off in technology and internet stocks. The Dow Jones Industrial Average suffered its worst loss in eight months, falling 3.1 percent to 25,598.74.
The S&P 500 index sank 3.3 percent to 2,785.68. The Nasdaq composite, which has a large contingent of technology stocks, was 4.1 percent lower at 7,422.05. It has fallen 7.5 percent in just five days. The Russell 2000 index of smaller-company stocks shed 2.9 percent, to 1,575.41.
Apple and Amazon, the two most valuable companies in the S&P 500, each had their worst day in 2½ years. Apple slipped by 4.6 percent while Amazon lost 6.2 percent.
Amazon has soared 50 percent this year, but its stock has fallen 14 percent from its all-time high in early September.
Francis Tan, an investment strategist at UOB private bank, believes the markets will likely pick up in the U.S. session. “The valuation of U.S. stocks, especially tech stocks, is still pretty high and there could be some profit taking actions now,” Tan explained.
The dollar slipped to 112.17 Japanese yen from 112.27 yen late Wednesday. The euro rose to $1.1566 from $1.1523.
Oil futures fell. U.S. crude gave up $1.27 to $71.90 a barrel. The contract settled at $73.17 in New York. Brent crude, the international standard, dropped $1.58 to $81.51 a barrel.