Why Cryptocurrency is Failing – Analysis of the Market

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Why Cryptocurrency is Failing – Analysis of the Market

By | 2018-08-01T08:03:21+00:00 August 1st, 2018|Categories: Crypto Category|Comments Off on Why Cryptocurrency is Failing – Analysis of the Market

 

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Even the mighty may fall

The last year was very important for the cryptocurrency. While new cryptos gained value, others which were dominant until then, plummeted down. 2017 was the year when it became clear that even the “altcoins” apart from the Bitcoin are not that insignificant.

Even though Bitcoin gained 1000% in value last year, it is not the biggest performer when compared to the other cryptos. It actually dropped below the top 10 best performing cryptos in 2017. Ripple took the trophy of the best performer of 2017.

Bitcoin took the 14th place in the top ranking list. The beginning of 2018 was pretty turbulent as well. A lot of changes happened, and the performance of all cryptos was affected. Even the top-performing Ripple started losing health.

It lost about 19 billion USD in one day. But it improved about 37% so far. The second most popular cryptocurrency, and the main alternative to Bitcoin, Ethereum had a big drop in value.

But it started improving since the February and had ups and downs since then. The cryptocurrency that had a significant increase in 2018 is NEO. It maintained its growth since the December last year, and it is the most consistent crypto compared to all others.

NEO aside, every other crypto suffered serious losses. A lot of investors lost a portion of their money due to the hard fall of Ethereum, Ripple, and Bitcoin. The so far top players in the cryptocurrency market suffered the losses of $100 billion dollars.

Bitcoin last more than half of its value alone. The fall of Bitcoin brought the entire cryptocurrency market down as much as $70 billion. Following Bitcoin’s fall, Ethereum dropped and froze at $150 USD. This change caused a lot of investors to panic.

Many of them started cashing out due to the fair of further loss. Some converted their coins to USD; others exchanged them for some other crypto. The first ones to panic and cash out were the amateur investors, who are not experienced enough to stay calm and hold on to their coins.

As it’s the case with any market, the rules of supply and demand dictate the outcome of value. All cryptos are still suffering, but the hottest topic is still Bitcoin, mostly because its priced soared to $20,000 last year, and then it started plummeting.

Not to mention the complete collapse of Bitconnect, that turned out to be a complete fraud.

 

The cause of the fall

The losses are recorded, and the prices dropped, but why? Why cryptocurrency is failing?

The case of cryptos is a bit unique, and there are several factors that contributed to the fall of all coins. The biggest and most important is the pressure from the governments all around the world. Many countries implemented regulations specifically to bring down the crypto trade.

Some even decided to completely ban the use of cryptos. The government bans played a significant role in the health of cryptos around the world. Following the strict regulations and bans, the collapse of Bitconnect further affected the value of the cryptocurrencies.

Until then, all cryptos had minimal government involvement in their operations. And just is the case with everything, it all goes well until the government involves.

The second biggest factor was cashouts by post-ICO companies. Many startups raised a lot of money from Ethereum and started cashing out through ICOs. They managed to raise millions of USD through Ethereum.

What many oversaw is that majority of these companies are not worth the money they gained and are pretty overrated. These companies used their marketing skills to raise their value, and then cash out, resulting in the drop in the value of cryptocurrencies.

Startups seek to make quick money, and they are very eager to trade their coins, which affects the entire crypto market. But, contrary to them, serious companies tend to hold on to their coins. But it’s not uncommon that they tend to cash out as well.

Due to the inconsistency of the crypto market, they tend to cash out and keep their fortune in fiat currency.

Further, the important factor is a lot of amateurs in the trading market. Due to the easy availability of the crypto trading market, many amateurs saw this as an opportunity to make easy cash. They tend to panic quite fast and cash out all their value in digital coins.

Their emotional and quick decisions make the already inconsistent market even more unstable.

When you take everything into consideration, the small startups, ICOs, government involvement and amateur investors, what we saw so far was bound to happen sooner or later.

The bright side of things

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Even though there’s a lot of involvement and effort to bring down the cryptocurrency, which is exectly why cryptocurrency is failing, it’s here to stay. Of course, not all of them will make it, because the banking system will continue to do everything it can to stop the crypto trading market.

Some of the major coins will prevail, and they still have a big potential to change the entire financial system. So, should you be worried, or continue investing? Have in mind, that once the crypto market goes mainstream, the cap will go up and with it the price of the cryptos.

Observe the big ones, and serious ones, who don’t have ties to banks or governments, these are the only ones that will strive to stay here for good.

 

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