January 2018: Cryptocurrency Bloodbath

Guest Author | February 1, 2018 | 7:31 pm
Bitcoin Cash Price Technical Analysis BCH USD

January 2018: Cryptocurrency Bloodbath

Guest Author | February 1, 2018 | 7:31 pm

Mere weeks after Bitcoin peaked at close to $20,000 in December 2017, a widespread crash brought the crypto top dog and rest of the cryptocurrency market, down to its knees. While Bitcoin was already on a steady decline since reaching its all-time high valuation, the magnitude of the situation worsened on January 15, 2018, as other major cryptocurrencies like Bitcoin Cash, Ripple and Litecoin followed its lead.

It wasn’t just the major cryptocurrencies that declined by a significant percentage. Hundreds of other altcoins also saw their upward momentum reverse almost overnight. The cumulative market cap of all cryptocurrencies also briefly dipped below $500 billion. Only a month ago, that figure was closer to $800 billion and well on track to cross the trillion dollar threshold for the first time.

Several reasons have been attributed to the cryptocurrency market’s sudden downturn. A day before the crash, several media outlets reported that some Asian countries were going to impose heavy regulations on digital currencies and initial coin offerings. Considering that South Korean exchange Bithumb and some Chinese investors make up a large share of the total cryptocurrency trading volume, news of a possible ban potentially scared off many of the newer investors.

Yet another plausible reason for the decline could have been the rumors suggesting that China was seeking to ban cryptocurrency mining operations in the country. After all, it is quite an open secret at this point that the electricity consumption due to Bitcoin mining alone surpasses that of several developed nations combined. Despite the rumor turning out to be reported as false a few days later, it was simply a case of too little, too late.

The digital currency community is also speculating that Wall Street may be to blame for the largely sideways movement of the market. On December 12, 2017, CBOE began trading Bitcoin futures for the first time in the history. Furthermore, its rival, CME Group, also the owners of the largest futures exchange in the world, had its first contract expire on January 26, 2018.

In the futures market where the best prediction wins, stability is key. Crypto, on the other hand, has been known to be anything but stable. Consequently, some believe that Wall Street whales manipulated and distorted the market as per their preferences.

While none of the aforementioned reasons may have indeed been responsible for the sharp decline in prices, it would not be surprising if they were at least partially to blame. With a largely stagnant price, the digital currency market is no longer offering either the thrill of fast-paced price swings, nor the ability to easily make thousands of dollars in a day. The Bitcoinprice cryptocurrency newsletter, however, makes it a point to report such fluctuations in price.

Even though the correction may seem like a bad thing and, for some people, may appear to signal the end of cryptocurrency trading as we know it, the sudden dip in prices may have been warranted and in fact, necessary for a host of different reasons. Chief among these would be the fact that Bitcoin’s bull run from $9,000 to $20,000 was without much resistance and alarmingly quick. While rapid growth in price and valuation is not unprecedented, especially for older cryptocurrencies, typically, in the past, every time Bitcoin reaches a new milestone, the market tends to correct itself in response.

A correction in the cryptocurrency market is as important as it is for most other asset classes in the world of finance. That said, even though nearly half a month has passed since this correction or crash, Bitcoin and the rest of the market has not yet resumed its ascent towards new peaks. There is no doubt, that at some point, news of Bitcoin will hit mainstream media yet again.

  • Tribuni

    This is less news, and more a shameless plug for a newsletter…. weak sauce shouldnt be included in a news feed

  • Will Caruthers

    Who wrote this, Hillary Clinton? It blames external forces for everything, without bringing up the fundamental problem with cryptos themselves as being even partly to blame for this bubble bursting (it’s not a “correction” to be followed by a return to the mainstream). Nobody uses them as a currency, mining is a drag on the utilities and GPU markets, and blockchain innovations are now happening in cloud computing companies and no longer in “currencies.” This ship has sailed. It became an investment vehicle only, got hyped up, and now it’s deflating. Can you say “pump and dump?”

    Been driven to the stars, first by fanbois and then by the FOMO nation of naive “investors,” and now it’s time to pay the piper. End of story.

    Of course, that also means end of this newsletter, so of course they didn’t report it that way. 😉

  • I blame Bitcoin (BTC) for being shit. They failed to scale block size to meet demand which caused high fees and delays, and they sought to hastily fundamentally change the way the coin works with the experimental and incomplete Lightning second layer solution. People lost confidence and overall market dominance tanked to record low 33%. The failure of the first-mover reserve cryptocurrency is bringing everything else down.

    • Craig Campbell

      LOL you do realize that your god, Roger Ver, was one of the first people coming out in the mainstream media and smashing Bitcoin. His own ego got in the way of logic that the market moves with Bitcoin regardless of if it is the best currency or not. So him coming on CNBC and attacking Bitcoin ended up hurting both Bitcoin and Bitcoin Cash. Funny how that works

      • The BCH community encourages free-thinking, even if it’s against Roger. Many aren’t in it for profit but want good digital money that helps free the world from corruption and national politics. Most of the BCH community knows a BTC collapse will be painful but believe it’s necessary and will eventually lead to a stronger and more diverse market.

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