What the hell is happening to cryptocurrency valuations?
It’s hard to be an experienced investor, or even an at-home part-time trader, and not think of a massive bubble when you see that some asset has increased more than 400 percent in just a few months. It’s just how history works — when an asset rises that fast it’s a near certainty that it will come back down. Markets are irrational, after all.
So don’t be surprised if there’s at least some type of correction. There already was, a few weeks ago — bitcoin pulled back from a high of $2,700 to around $2,000, but, as of today, has slowly climbed back up to a new all-time high of ~$2,850.
That being said, we may look back in 12 months and realize that this two-month period of insane growth was less of a bubble and more of a rebirth of cryptocurrencies as a whole.
The fact that these gains have come from currencies other than bitcoin are a good sign that this is less of a bubble and more of a resurgence of interest in crypto. It makes sense that Ethereum is on a tear — the cryptocurrency has technological improvements over bitcoin, including the ability to code smart contracts directly into the blockchain, which in turn allow for things like the ability to build totally new tokens and even host ICOs (initial coin offerings).
Totally agree on valuations. Its a crazy time in this space right now, but good to see a little correction happening and some sideways movement in general.
Here was my article on valuations a week or so ago. https://steemit.com/cryptocurrency/@knowtheblock/the-difficulty-in-assigning-a-valuation-in-the-crypto-space-ico-s-and-tokens-heck-what-exactly-is-a-token-lets-discuss