The cryptocurrency market continues to decline. Market capitalization has dropped to $285 billion, while bitcoin has fallen to almost $6,000.

Bears continue to reign on the cryptocurrency market. The bitcoin rate, which, over the weekend, tried to overcome resistance and gain a foothold at $9,500- $10,000, returned to fall at the beginning of this week. On 6 February, bitcoin fell below $7,000 and is now approaching $6,100. At the lowest point, the average bitcoin rate touched $6,106.94. It is the lowest level since mid-November 2017. Compared with the mid-December peaks, bitcoin collapsed more than three-fold.

The period of decline embraced the entire cryptocurrency market. Prices of largest cryptocurrencies from the top 20 also fell to their lowest levels. Thus, Ripple declined to $0.61; Bitcoin Cash dropped to $794, and Litecoin fell to $110.

The cryptocurrency market capitalization shrank to $285 billion, after topping $800 billion in mid-December. The bitcoin dominance index increased to 36.9%, but it still remains at a low level in comparison with the previous periods.

What happens to the cryptocurrency market?

Several factors influence the cryptocurrency market. First, there is increasing pressure from national regulators. In South Korea, one of the largest markets for cryptocurrencies, new rules of cryptocurrency trading entered into force. According to the new rules, account holders will be obligatorily identified, and foreigners and minors are not allowed to participate in trading operations. Chinese authorities continue to struggle with digital assets. Last media publications revealed that China plans to block cryptocurrency-related websites using its Great China Firewall. In this section, you can find information on what ICO projects are on the "blacklist". Access to websites, offering cryptocurrency trading and ICOs, will be prohibited from the IP-addresses of mainland China. The EU authorities, in particular, France and Germany, are calling on G20 to put the cryptocurrency regulation issue on the agenda at the upcoming summit in Argentina. Financial authorities of India, a growing market with huge potential and interest in cryptocurrencies, complicates tax regime for cryptocurrency companies, refuse to recognize them as a legal tender and quake the market with contradictory statements that demonstrate hostile rhetoric toward new digital assets.

Secondly, the celebration of the Lunar New Year is nearing in China. In 2018, it falls on 16 February. This period is traditionally associated with a decrease in trading operations. According to various experts, this is due to the fact that retail investors in China withdraw funds from assets, including cryptocurrencies, in order to spend money on gifts on the eve of the Chinese New Year. Despite the ban on cryptocurrency trading in China, Chinese citizens continue to actively invest in cryptocurrencies, mainly through accounts opened in Hong Kong. Celebrating the Chinese New Year will continue after 16 February for another two weeks. At this time, most businesses and companies in the country go on vacation, and the Chinese people go to visit relatives and friends. Business life in this period is frozen.

Thirdly, the market was entered by institutional investors in mid-December. It became possible through the launch of bitcoin futures on two Chicago-based stock exchanges, CBOE and CME. According to the US Commodity Futures Trading Commission (CFTC), the majority of institutional investors prefer to bet on the drop of bitcoin. According to statistics for the week ended 30 January, they increased their short positions to 4842 against 2703 long contracts. Bear ratio, calculated by dividing the number of bearish contracts by the number of bullish ones, jumped to 1.79.

Fourthly, market participants are concerned about the investigation of the US financial regulator into BitFinex and Tether. With Tether issuing several million of USDT tokens, which are used on many popular crypto-exchanges as an analog of the US dollar, the Commodity Futures Trading Commission sent a subpoena to Tether. Although this happened on 6 December, market fears that the US regulator suspect that not all Tether tokens are backed by real bank deposits. This issue has long been controversial in the crypto-community, as many bitcoin enthusiasts assume that USDT tokens are not secured by anything and are emitted to manipulate the market, and this can ultimately lead to the market collapse. Doubts grew even more after Tether confirmed that it had recently broken off relations with its auditor Friedman LLP, who was supposed to check Tether's bank accounts and confirm that they correspond in volume to the number of issued USDT.