With bitcoin losing almost 40% of its value in only a week or so, and ripple as well as ethereum following close behind, many are wondering what the cause is. It is difficult to deduce what the main reason for this most recent crypto crash is and whether or not it could just be a large price correction for the market. Although it does appear like big banks did not have a hand in inflating the crypto bubble, it does seem likely that they have played some part in proliferating the issues with the market as a whole.
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In the beginning of the cryptocurrency industry, many big banks actually got behind cryptocurrencies in the hopes that they could become the future of banking and digital money. When these markets became highly speculative and filled with a large amount of crime, it seems that many banks decided to pull out and pledge their opposition to the market. A few months ago, the futures contracts for bitcoin were announced and put into play by CME. This has been linked to the crash that bitcoin saw early in the month, as many believe the market was manipulated to ensure that those rich enough to invest in the early futures, would be able to see high returns on their money.
Many banks also played a role in providing liquidity for these markets by allowing their customers to purchase cryptocurrency with debt such as a credit card. This helped to inflate the bubble by a certain amount. A report states that around 18.15% of individuals who bought bitcoin, did so using credit cards. As this market is able to grow in the near future, the hopes are high that it will do so without the high amount of speculation it currently has.
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