We’ve all seen the headlines. It’s no secret that one of cryptocurrencies’ main traits is its skyrocketing volatility. When Bitcoin reached the dizzying heights of $20,000 in December last year, it sent FOMO rushing through those who hadn’t invested yet. And sparked off parties in the living rooms of those who had. Cryptos were on the up and up in 2017 and yet, this year has been positively dreadful by comparison.
So what’s going on?
Having reached a whopping $834 billion in value, CoinMarketCap reported that the market plunged sharply by over 66 percent, equating to a loss of more than $500 billion. Bitcoin’s value was slashed by more than half, and Ether and Ripple suffered similar drops.
All this upping and downing began to send shockwaves through the crypto and wider communities, provoking talk about whether the bubble is about to burst and if the end of digital currencies is in sight.
So What’s Behind Cryptos’ Fall?
There are a few schools of thought on this. Some say the fear of missing out late last year drove masses from the wider public to invest. This led to an over inflation of prices from which the market is only now beginning to stabilize, explaining the reason for the price dip. Others believe there are a combination of wider factors at play.
With the abundance of news of hacking scandals and the recent hack of Coincheck, which caused a $530-million loss for the company, security is a major issue for cryptocurrencies. And it’s one that’s causing many an investor to stay away or pull out. News of fly-by-night ICO teams raising millions of dollars and disappearing with investors’ money does little to add credibility either.
Tensions that are already running high are not eased by rumors of scam artists and dark deeds. Neither are investors happy to hear of increased regulation and investigation by the SEC, and concerns that many ICOs are being investigated and shut down. Economists around the world spelling doom and gloom and the Bank of Austria calling Bitcoin’s value “pure speculation,” have also served to fan the flames.
Added to that, the Chinese ban on cryptocurrencies altogether and the fact that India and other countries may follow suit, and it’s almost easy to see why cryptos plummeted.
A Comeback for Cryptos?
While some see it as the doomsday predicted by many, others see it as an opportunity to buy more or to hold. Your next move here depends on the kind of investor you are. One comfortable with sharp drops and rises, or one who panics about unexpected downturns.
After a dire start to the year, March has begun in a sprightlier way for Bitcoin, Ether, and friends. Bitcoin is clawing back its value, currently standing at $11,300. The market has surged by over $400 billion, and Ethereum and Ripple are flying high, increasing value by over 20 percent.
What does all this increase in activity mean for cryptos as we move into the future? A second surge in value, perhaps, with cryptos reaching over a trillion dollars? Or a crypto-style nuclear winter that sees digital currencies quashed by regulation? Either way, it’s going to be a wild ride.