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Jul 17, 2017 08:55 PM IST | Source: Moneycontrol.com

Big correction on crypto-street: Bitcoin, other digital currencies crash 10-20%

Following a spectacular rally this year, cryptocurrencies such as bitcoin have witnessed what some say is a 'healthy' correction.

Sidhartha Shukla @shukla_05sid

The cryptocurrency market is painted red as major currencies witnessed double-digit fall in the past 24 hours, as per Coinmarketcap.com.

A flurry of news events like cryptocurrency exchange Bitfinex being hit by a DDoS attack, an Australian politician calling for stricter regulation around bitcoin and major mining hardware producer Bitmain's announcement that it may launch a “hard fork” in August which could have triggered this correction.

At the time of filing, top digital currencies like bitcoin, ethereum, ripple, litecoin and dash were down around 16 percent, 20 percent, 14 percent, 9 percent and 16 percent, respectively, over the past 24 hours.

Cryptocurrencies in total have lost about USD 16 billion or 15 percent in marketcap.

Among the top 10 currencies by market cap, IOTA saw the highest profit booking and has fallen around 44 percent over the last 24 hours.

Newly launched on Tuesday, the IOTA token had a stellar debut on the Bitfinex exchange. In a matter of hours it crossed USD 1.5 billion in market cap.

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Cryptocurrency market leaders, bitcoin and ethereum both have fallen around 24 percent since Monday after establishing new all-time highs.

Since the start of 2017, bitcoin along with altcoins have witnessed humongous appreciation due to growing popularity and legal acceptance.

Must read: Apart from crazy rallies, cryptocurrencies have other perks too

While many like WhalePanda blame Bitmain for this fall, some experts believe that this might be a necessary market correction due to the sudden surge in prices of cryptocurrencies led by speculative buying around the world.

Global bitcoin and blockchain expert Andreas Antonopoulos tweeted:

Marius Rupsys, a cryptocurrency trader and co-founder of fintech startup InvoicePool told CoinDesk that the increasing price [of cryptocurrencies] has been largely caused by highly optimistic newcomers, a prospect that leads him to believe the bull run could soon fade.

"Many of these new traders are retail traders that have little knowledge of crypto-assets or trading in general," he said.

Charles Haytar, the CEO of CryptoCompare, agreed, saying that many inexperienced investors are coming in the market, and it’s causing a bit of a bubble-like situation.

“I would not advise anyone to buy right now. I’m worried that the lack of rationality at this point might hurt the market,” he said.

For example, one of the major contributors to ethereum's rally has been South Korea lately. Since March, demand from Korea has seen a major uptick and currently, over 50 percent of trades are done in the Korean won (KRW).

But to pinpoint one reason behind this rally may being facetious. Even ethereum founder Vitalik Buterin, in an interview said he had 'no idea' why South Korea has become the largest ethereum exchange market.

'Flippening' delayed

The recent correction could push out the much-awaited event, termed 'flippening' in the crypto-community -- which is when ethereum's market cap overtakes bitcoin's, making it the most valuable cryptocurrency.

On Monday, when bitcoin suddenly dipped around USD 400 while ethereum rallied past USD 400, flippening was thought to be around the corner.

Read more: Here's a quick look at ethereum, the cryptocurrency challenging bitcoin's dominance

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