Bring Back Crypto Euphoria: When Will the Madness Return?
The beginning of 2017 brought amazing gains in Cryptoland and made many cryptocurrency investors and first movers very rich and happy. Unfortunately, markets that go up with no consolidation can’t go up forever and consolidation is a necessary action to restore confidence and the belief of true value. Here’s the question that people have trouble asking…
What’s a cryptocurrency worth?
That seems to be one of the biggest problems for this emerging market so the common solution is to BUY THEM ALL…
This unfortunately is also unsustainable and with a limited amount of funds available in expanding the overall cryptocurrency market capitalization, choices need to be made. This unquenchable growth has resulted in one of the biggest cryptocurrency crashes in June of 2017.
What could have caused such a huge crash in Altcoins during June of 2017?
The answer to this question is complex but can be broken down into a few events…
1.) June 2017 has had a record number of ICO’s (initial coin offerings). Most of these ICO’s took place on the Ethereum network and as a result, ETH was transferred to these newly emergent cryptocurrency companies in exchange for their newly minted tokens. Unfortunately this clogged the blockchain, made it difficult to trade ETH and crashed major exchange websites such as Coinbase (one of the largest American crypto exchanges to this date). As a result, this has caused a lot of crypto investors to question the value of the technology and feel an urge to take profits.
2.) Ethereum has proven to be slower and less able to scale to increased trading demand showing major flaws in one of its main touted advantages over bitcoin. With Segwit coming for bitcoin as early as next month this makes the value proposition of ETH a lot lower.
3.) The great ‘flash crash’ on GDAX that occurred in late June went further to shake investors causing some investors to have their accounts liquidated and their ETH sold off. Some investors were shocked to realize their ETH had been sold off for as low as $.10
4.) Concurrent to this ‘flash crash’ popular exchanges and sites temporarily stopped the trading of ETH. Other sites that offer 1 to 1 currency exchange such as SHAPESHIFT and CHANGELLY also temporarily stopped transfers between ETH and other currencies further shaking investor confidence.
These events left investors shaken and gave pause to the euphoric purchase of crypto-currencies that had occurred previously.
Since the madness, ETH has dropped from a high of about $390 to a low of around $210 and now hovering in the $260-280 range. All other crypto currencies except for a few have suffered the same fate to different extent.
When will the madness return?
It’s hard to tell where the cryptocurrency market cap will go from here but signs say that beyond a slight pause, the market will return to its steady climb upwards.
What have we learned moving forwards?
Because of the quantity of new ICOs now on the market and the abundance of different tokens and coins available, the market will have to become more discriminatory about which coins are funded at some point.
It’s my belief that although crypto currencies are extremely volatile, some will continue to appreciate at a rapid rate based on their marketing and the technological advantages they offer over bitcoin.
As always it’s wise to buy on dips and take profits on new highs as even the best of markets will continue to grow and consolidate.
Any thoughts or feedback is greatly appreciated!
Follow me: @ldauch
Sources:
https://steemit.com/cryptocurrency/@jrcornel/it-s-carnage-out-there-in-crypto-land-what-s-going-on
https://techcrunch.com/2017/06/24/coinbase-is-reimbursing-losses-caused-by-the-ethereum-flash-crash/
http://www.zerohedge.com/news/2017-06-25/its-virtual-bloodbath-cryptocurrency-carnage-continues
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great article. followed upvoted and re-steemed
Thanks! Ill follow back. Keep in touch!
I think the madness is happening now^^
well, we can only hope right?
Good insight - Thanks
Sure. Happy you enjoyed it!