Cryptocurrency markets get a big slap in the face

The world’s crypto markets took a collective dive, and it all started while you were sleeping.

The cross-currency crash began just after 4 a.m. on Wednesday, September 5, and it touched every token you can name. At the time of this writing, Bitcoin is barely above $6,000. Ether is down 23 percent to $220. Bitcoin Cash, XRP, and Litecoin all took substantive hits. Even DogeCoin is down. Where Tuesday’s crypto market capitalization was around $240 billion, it was about $217 billion less than 24 hours later.

So what’s the deal? There are two pieces of information to help us understand this drop.

First, Goldman Sachs has downplayed its plans to open a crypto trading desk. The mainstream financial institution set expectations long ago that it would let people trade tokens with all the legitimacy of buying and selling stock. It would be a common sense extension of their existing crypto futures and difference markets. But after all the talk, that plan is no longer a priority.

“In response to client interest in various digital products, we are exploring how best to serve them in the space,” a company spokesman told Business Insider. “At this point, we have not reached a conclusion on the scope of our digital asset offering.”

The rationale is that the cryptocurrency industry is too nascent for a big bank like Goldman to make meaningful moves while still maintaining regulations. It’s a conservative about-face on the firm’s plans, although it does operate futures and difference markets for crypto customers.

Secondly, crypto markets are reeling because high roller crypto-whales are dumping their holdings. Most notably, two crypto wallet addresses believed to be associated with the notorious drug marketplace Silk Road have started moving some $1 billion in crypto assets. Trades of this magnitude will only send ripples far and wide through the market.