Why Cryptocurrencies are Down and What to Expect
Nobody seems to be talking about it here on steemit but the price of cryptocurrencies has been taking a beating this past week. If you're new to cryptocurrency and you haven't developed the discipline to hold on to your coins during times like this, it could be a very scary time specially if you have invested your money as I did.
I am, of course, speaking from my own experience. It's only my third month on steemit. I've only bought SBD two months ago but I've seen the price of steem double and then drop down below the amount I purchased them within that short time span.
So I did what any newbie coin holder does during drops in prices. I read everything I can about the topic. This is what I've learned so far . . .
Every Existing CryptoCurrency is Still Coupled with BitCoin
This simply means that all other existing coins are tied to the price of Bitcoin. If Bitcoin drops, all other coins drop. If bitcoin gains, all other coins gain as well.
Allegedly, Bitcoins extraordinary price surge last December was fueled by price manipulation centered around Bitfinex and Tether. If the price of Bitcoin was artificially inflated, it would naturally correct and lose value taking along all other coins with it in the plunge.
Ideally, each coin must be evaluated by its own merits. That's still not happening but should in the future. It's called 'decoupling' and should benefit the entire crypto industry as we won't all be dependent on the price of Bitcoin.
Security Issues
Blockchain tech is highly secure. The security problems often exploited by hackers are in the exhanges.
One reason often cited as a contributor to the falling prices of cryptocurrency is the hacking of CoinRail, a relatively small coin exchange in South Korea. However, some say that it couldn't have been the cause of the continuing fall of crypto prices.
Regardless, it's clear that some exchanges are not taking security as seriously as they should. This issue has been happening again and again.
I will not go into how to secure your account, your wallets, and your coins. That is your responsibility and if you haven't taken steps to secure your assets, stop reading this and go secure your coins first.
Government Regulation
The SEC now considers ICO's an unregulated securities market. And the governments seem to have a good reason to regulated ICO's and cryptocurrencies in general. The general public is not protected from fraud.
If you ask me, anyone trying out cryptos should do their homework first. But, government protection should help.
Still, government regulation seems to be a turn-off for a lot of investors. And thus, it's a contributing factor to the falling crypto prices.
The Sky Isn't Falling
The crypto market has seen its ups and downs for several years now. We know that you can lose money if your timing isn't right. Overall, the crypto world isn't doing so bad.
As for me, I will continue doing what I'm doing, accumulating as much SP as I can no matter what the USD value is. I know it won't keep falling forever. It might take months to go up again but I don't care. I'll just keep doing what I've been doing.
A bull run is coming...coming very soon
I am not to worried about the crypto market in the long term. I only buy a little bit here and there, which allows for dollar cost averaging. What does concern me is that most ways in and out of the crypto market goes through bitcoin.
About 9 months ago I heard about this tether issue, that they were suspected to be buying lots of bitcoin through tether, and suspected it would be an issue. On top of that, if you look at other crypto including steem, you have to go through bitcoin or ether to buy steem. So the step is, link bank account to Coinbase, then buy bitcoin. Then use your bitcoin wallet to buy steem with ether or bitcoin. Maybe not the only way, but that’s a typical way to buy right? It’s like that with nearly every crypto. So demand in bitcoin may go up because of that.
Lets take this example in the opposite direction now. You earn a bunch of steem and you sell it for bitcoin or ether, transfer it to your bitcoin wallet, sell it at Coinbase for US dollars, and have it transferred to your account. You might do this with your ripple, dash, steem, or any other of the 1200 crypto that you own. If everyone is trying to sell at the same time, the market falls apart. I think just the sheer number of cryptos with only a few limited ways out is bad for liquidity. Liquidity is limited, so it’s not good for the market.
I still hold, but I see the weakness. Long term is positive for blockchain, just like long term was good for the internet 20 years ago. Short term though, these 1200 crypto currencies with a continuing number coming online is not good. The weak will fall, the strong will survive. Liquidity is the weakness, and when everyone freaks out, we will see the sky fall for a bit. But crap, we are down 70% from the high. Maybe the sky has fell? Who knows.
I was calling it a bubble when I bought at $250 and it went to $800, I still called it a bubble at $2000, and $4000, and $6000, and $18,000. I really am not a sage on bitcoin. The long term is good, short term I just see it flat for a while. The consolidation of currencies will happen, just like any other industry, bitcoin will survive it. Others will survive it. Time will tell.
To me you are hundred percent right with your assertion, and another way to get out of this current scenerio is the acceptance of fiat currency. If many exchange allow straight conversion from cryptocurrency to our traditional currency it will go a long way in boosting the market for profitability thus making it exciting.
Very good insight, but I disagree, if the government gets involved, even with fraud, in more cryptocurrency specific legislation, then I cant help but think that they will continue to expand and encroach on cryptocurrencies over time.
As for generally everything else, I agree with what you wrote, it's important for many cryptocurrencies to break away from reliance on base bitcoin markets. Ethereum has seen a lot of growth, and some exchanges offer Bitcoin Cash (BCH) as base markets, but our overall reliance on Bitcoin charts seem to have a major effect on all cryptocurrencies, which is only due to its popularity. If Bitcoin ever becomes second best to another cryptocurrency (in popularity), we'll see an interesting shift in how the market reacts to mainstream coins.
Last year when i saw the way and speed at which new ICO are springing up here and there, i zeroed my mind for government intervention. Let face it many of all this ICO are nothing but fraud in disguise and have left many people in tears. So the government coming to regulate the market is just their own way of protecting the people from fraud. We can not our cake and expect to have it, some bad ass people took advantage of the decentralised and cloak nature of cryptocurrency to wreck havoc on their fellow human being and don't expect the government that has been looking for way and excuse to come in to hear something like this and not act.
The government regulation is here to stay and just as you opined, more strigent regulatiin is on the way.
Another reason for cryptocurrency's recent struggles in terms of price is adoption. Its simply too difficult for non-technical people to adopt from fiat to cryptocurrency. This is what Blockbasis is working hard on, letting users send and receive cryptocurrency via email, a common tool that most internet users know. No more public or private keys, send or receive your Bitcoins, Ethers, Litecoins and 15 other cryptocurrencies via email with Blockbasis!
Like PayPal but with crypto! Interesting. This could take off. You don't seem to support Steem though.
What we need is just some fundamentally positive news..
What i have seen is technical are failing in this downfall as of my bitcoin friends most of them do technical analysis but 60% of them are giving -ve results.
So all in all fundamentals are ruling
There is a saying in regards to the stock market that "You shouldn't try to catch a falling knife". The theory is that a stock or asset will continue to trend down until there is a reversal. So it's better to buy after the reversal to ensure you get a good price.
I am personally planning on purchasing SP during the next reversal. Thank you for writing this!
Good morning from Russia. Appreciate your article.
I am also bullish about crypto. Few days ago I've made a video explaining what we are going to see with the price of bitcoin this summer both from the tecnical and fundamental points of view.Till now everything is going in direction of my prognose. Would you be so kind to check this out and share your opinion about it? It is very hard to promote my work in steem despite the efforts, so I would be very grateful if you help me with this in case you find my review and analysis logic and helpful.
Thank you very much in advance.
https://steemit.com/cryptocurrency/@dunkan/why-bitcoin-will-not-drop-to-4k
Try reading my blog
Crypto is done guys! Sell sell sell! :) :) :P
To listen to the audio version of this article click on the play image.
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