Bitcoin, Ether bounce after weekend plunge

Prices of bitcoin and rival Ether bounced slightly on Tuesday after sharp falls during the Labor Day weekend, when currencies tumbled following news that Chinese regulators declared initial coin offerings illegal.

On Tuesday a single bitcoin

BTCUSD, +0.69%

was up 0.5% at $4,350, but still down about 12% from its peak on Friday, when it traded above $5,000, according to CoinDesk.

Prices of Ether on the Ethereum network were up 2.9% at $307.30, though still down more than 20% from its recent peak on Friday at about $390.

Even after recent bouts of volatility, digital currencies are sitting on tremendous year-to-date gains.

Bitcoin is up more than 300% year to date, while prices of Ether tokens have advanced more than 4,000% since the start of the year, fueling demand and optimism about other digital currencies. Their combined market capitalization is only slightly below $100 billion, while total market value for all coins is $148.7 billion, according to

Read: Literally just one huge chart showing bitcoin’s incredible rise to $4,800

The market for blockchain projects funding through initial coin offerings or ICOs has exploded this year, raising nearly $1.7 billion so far, up from $256 million last year, according to research site CoinDesk. That is 600% year-over-year increase.

According to a Goldman Sachs report, far more money has been raised in coin offerings than early seed venture capital funding this year.

So-called ICOs are akin to crowdfunding efforts, where coins or digital tokens can conceivably be used at some later date to pay for a goods or services from the company issuing the token.

The explosion of ICOs has attracted the attention of regulators in the U.S., however, with the Securities and Exchange Commission recently warning that it may treat such coin offerings as securities, potentially opening up the cryptocurrency industry to stricter oversight.

Also read: Confused about bitcoin? 10 things you need to know

The stratospheric rise in bitcoin’s value and other cybercurrencies has been compared with historical bubbles in other assets, with some experts warning about an eventual collapse.

Nobel Prize winner and author of “Irrational Exuberance,” Robert Shiller, in an interview with Quartz said bitcoin was the best example of a bubble.