Why are all cryptos falling? Should we be surprised really? If we had to use one word to describe cryptocurrency markets, that word would be “volatile” without a doubt. The cryptocurrency market can experience some significant swings in a matter of hours, but it wouldn’t be cryptocurrency if it didn’t. In January this year, the cryptocurrency market had an estimated worth of US $819 billion but depreciated by 80% to $239 billion this week alone. What about the King of cryptocurrencies? Bitcoin has declined in price over 40% in the last month.
So if you asked me today, should I invest in bitcoin? I would probably say that it is not the best option right now, or is it?
Why are cryptos falling?
Could we say that for bitcoin it is because of its record rally last year?
Before we can go into the more speculative and specific possible reasons for the downfall of cryptocurrencies, let us have a look at some of the more general factors that affect the rising and falling of cryptocurrencies.
The first reason why cryptos are falling is – EXCITEMENT
Without going any further into the external factors, we must first acknowledge the nature of cryptocurrencies as a decentralised payment method that is very particular about security and privacy. The interest in cryptocurrencies especially bitcoin is inevitable. The quality and attributes of cryptocurrencies attract newcomers as well as investors with experience. The excitement is an asset but can also be disruptive. The hype, however, aids the inflation of the cryptocurrency value.
Cryptos are also collapsing due to – REGULATIONS
One thing that can inevitably cause the plummeting of prices in full force, is the introduction of new regulations. With the Governments and central banks getting up to speed with the cryptocurrency sensation.
More strict rules are bound to be brought into the equation. The more stringent the rules become, the higher the chances of more sharp price dips.
More so if the cryptocurrency decentralisation factor is disrupted.
Altcoins are plunging because of – COMPETITION
When it comes to cryptocurrency, it seems like Bitcoin is a one-person band, but it is not!. Some alternatives are available now that have features and strengths different from bitcoin. In terms of value, competition is bittersweet. It helps to grow and develop the market as a whole. At the same time, it weakens the impact of one specific currency.
Another reason why cryptocurrencies are weakening is – ADOPTION
There has already been a sign of acceptance with the use of cryptocurrencies. With more and more bitcoin investments, crypto start-ups, bitcoin ATMs and so on. The more people start to accept cryptocurrency as an official form of payment as well as a great asset; it will be tough to ignore. As the number of retailers who allow payments in cryptocurrency increases, the more the use of cryptocurrencies. When larger well-known companies hop on to that train, anticipate skyrocketing prices.
More reasons for cryptos dropping? – TECHNOLOGY
The new Bitcoin ATMs, currencies and platforms emerging ever so often is an excellent sign of technological developments. The more the technology advances and is easily accessible, the more value is added to the market when people start to appreciate and take time to understand cryptocurrencies and the blockchain itself. The status and ultimate image of the cryptocurrency market will get a huge leg up.
Last reason why cryptos are sliding – REPUTATION
Still, on the matter of image, it matters a great deal as well. Negative cryptocurrency news stories like scams and illegal transactions will crush the reputation of the market. This will ultimately raise eyebrows and discourage any potential investors.
These are just some of the significant factors that affect the volatility of cryptocurrencies. Nevertheless, experts believe this is not the bottom just yet with bitcoin expected to go down even more to US$ 2500 by January 2019.
Ultimately, is there a comeback for Cryptos or is this IT for cryptocurrencies this year?
Last year in December Bitcoin had a lot of motivation with prices dancing around $20 000 causing the exciting climax of cryptocurrency.
The bitcoin price reached at the end of 2017 had industry professionals predicting the same kind of trend this year. But is it too late? As we are now in December and the year is coming to an end, can this prediction still come to life?
NOVEMBER KILLED IT – Has November 2018 broken the possible end of year climax trend?
November 2018 has been a nightmare for cryptocurrencies as a whole. The cryptocurrency news is filled with all kinds of opinions and statements. The price of bitcoin declined more than 40% in just a month, Pulling down other cryptocurrencies with it as usual. Bitcoin price in dollars at the beginning of November was around $6500. This was before the storm hit! Taking down the bitcoin price in dollars to $3 550, the lowest this year.
It’s not like bitcoin has not had these kinds of crashes before, it has. But this crash has had the most impact falling about 45%. Not just the price, but the market capitalization as well went from $113 billion at the beginning of November to now $70 billion. The crash in April 2011 of a 39% dip that gave the bitcoin names like “the bubble” and “a fraud” does not come near this current downfall.
What is to come?
According to coinmarketcap, bitcoin is currently trading around $ 4 156; this price is a recovery from the low weekend price of $ 3 950. However, the price will probably fall to $ 3 500 testing the support once again as it seems to be repeating the market patterns of 2014 – 2015 when bitcoin was somewhat pessimistic. Experts predict more losses still to come especially if the support is broken around $3 500, Bitcoin may drop below $2 500.
Final thoughts on the reasons why cryptos are collapsing
It is evident that those people that were skeptical in the first place are having a bit of a giggle. And perhaps some current and potential investors have been spooked. However true believers of the impact cryptocurrency will have in the world will not give up just yet. As the world-renowned venture capital investor Tim Draper believes.
Out of the whole worlds currency value, two –thirds of it will be occupied by cryptocurrency.