Ether, the second-largest virtual currency, slumped 8.9% from its level at 5 p.m. New York time on Friday, according to Bloomberg composite pricing. Bitcoin lost 2.1%, while the market capitalization of digital assets tracked by CoinMarketCap.com shrank to $197 billion — down about $640 billion from its January peak.
Cryptocurrencies have declined for five of the past six weeks amid concern that a broader adoption of digital assets will take longer than some had anticipated. That worry was underscored over the weekend after the U.S. Securities and Exchange Commission temporarily suspended trading in two exchange-traded notes linked to cryptocurrencies and Ethereum co-founder Vitalik Buterin told Bloomberg that the days of explosive growth in the blockchain industry have likely come and gone.
“The temporary suspension of these products led to an initial knee-jerk reaction,” said Ryan Rabaglia, head of trading at cryptocurrency dealing firm OSL in Hong Kong. “But ultimately, it’s just another obstacle for the market to overcome.”
Cryptocurrencies remained under pressure on Monday despite reports that Citigroup (c) has developed a new mechanism for investing in the space. The U.S. bank plans to act as an agent issuing so-called digital asset receipts, or DARs, to enable trading by proxy without direct ownership of the underlying coins, a person with knowledge of the plans said.
The Bloomberg Galaxy Crypto Index of major virtual currencies dropped 4.1% to 392.68 at 8:28 a.m. in London, heading for its lowest close since mid-November. Ether fell to $199.05 and Bitcoin slipped to $6.313.51.
Ether has tumbled faster than Bitcoin in recent months on concern that blockchain-related firms are cashing out of the No. 2 cryptocurrency. Many startups that raised Ether from investors in their initial coin offerings will eventually need to sell their holdings to cover expenses like salaries and development costs.
“The rhetoric around ICOs continuing to unload their raise proceeds on the market remains valid,” Rabaglia said. “It’s hard to see how that story line will go away any time soon.”