The crypto-currency market has lost 20% in two days as it fell to $142 billion yesterday. A few days ago, its total market cap was $180 billion. The bigger crypto-currencies have also been affected, with Bitcoin down more than 16% and Ethereum over 23%.
Clearly the ban on ICOs from the Chinese government, which ordered all ICOs to return funds to investors, has played a strong role. This is likely to impact smaller crypto-currencies like NEO, a Chinese-based crypto currency, down 50% in a few days.
However, this crash is relative, as Bitcoin for instance is still worth double the price it was four months ago. A correction may have been overdue: Bitcoin recently hit an all-time high of nearly $5,000.
Is this the start of a longer market correction or just a natural cool down from an over-heated market, coupled with a reaction to the announcement from China? Crypto-currency prices are already showing signs of a rebound.