Yesterday was a dark day for cryptocurrency. As the total market cap continues to fall, entities like bitcoin, Ethereum and Ripple are experiencing their lowest points of the year, and it’s unclear when the bulls will enter the fray.
Did Bitcoin Peak Too Early?
Cryptocurrency has been the object of mixed reactions over the past year. Since late 2016 – when bitcoin first hit the $1,000 mark – it’s been clear that there was something special about this new form of technology. Investors saw crypto as a unique and intriguing way to diversify their portfolios and avoid some of the scares of traditional stocks and bonds. Bitcoin was jumping through the roof at the time and continued to do so through 2017, peaking in December at just under $20,000.
Traders saw the bait and took it, but then something strange began to occur. Cryptocurrency began a sudden – and rapid – descent into nothingness. By the following month, bitcoin was falling to $17,000, then $13,000. From there, $11,000 and $10,000 became imminent until the five-figure range was something of the past. At press time, bitcoin is trading for just over $6,000, which is an “improvement” over today’s early morning hours when bitcoin was at $5,900 – a figure it previously held in June.
What the Heck Is Going On?
Throughout the year, many explanations have come and gone regarding what’s occurred. Some analysts believe that the hype and hoopla surrounding bitcoin was short-lived simply because people lost interest. Bitcoin is still a birthing technology, and while it’s growing every day, it doesn’t have the mainstream acceptance of credit cards or cash. People realize that this is a currency that isn’t used or accepted like other forms of money.
But others saw more technical – even deceitful – practices behind bitcoin’s problems. University of Texas professor John Griffin published a report recently suggesting that the bitcoin boom of 2017 was fake – that it did not occur naturally, and that bitcoin was being manipulated through another well-known cryptocurrency called Tether.
Panic in the Streets
The consistent drops have caused massive sell-offs, and as the largest digital asset by market cap, bitcoin is not alone in its present descent. Ethereum – the second-largest cryptocurrency in the world and bitcoin’s primary competitor – yesterday traded for about $258, the lowest figure it’s held all year before since recovering slightly to $285 at the time of writing. Ripple, the third-largest cryptocurrency, has fallen by about 14 percent in just the last few days alone.
Still, however, many feel that cryptocurrency isn’t done just yet, and defend its abilities and benefits the way most of us would probably defend traditional fiat. One Reddit user, for example, says that despite the consistent price swings, he’s not willing to part with any portion of his crypto stash. He insists there’s nothing wrong with bitcoin, and that the currency still “works.” He writes:
“Am I selling now? No way. Why not? Because bitcoin is not broken. Nothing bad happened to bitcoin. It still works. Will there be bumps along the way? What do you think we’re experiencing now? Some of [you] get to decide: are you going to be a coward or not?”
More Time Is Needed
Charles Hayter – CEO of CryptoCompare – believes that the SEC’s recent decision to postpone all action regarding the VanEck SolidX bitcoin ETF is the main instigator behind crypto’s recent price falls, saying that it has “snowballed negative investor sentiment,” though he predominantly blames the recent activity on the fact that bitcoin still needs time to mature, and that a few drops will occur on the way towards a massive price swell:
“Bitcoin and its ilk are opening up a new arena of finance. The hope and speculation that gripped the market last year has been eroded in the last few months. That said, under the hood, a lot of work has been moving ahead to form the routes to incumbent institutions and to provide them with the tools, mechanisms and assurances they need for entering the cryptocurrency space. It’s only a matter of time before the crypto sphere becomes part of the mainstream, but it needs to do a lot of growing up in the process.”