Since the start of 2017, cryptocurrency had a remarkable run. That was, until January of 2018.
As good a year as 2017 was for the alternative monetary system, 2018 is equally as bad. Thus far, the market gave back all of the gains made in the serious run up last year.
Looking from the all-time highs, Ripple is down 89%, Ethereum rings in at 76%, and Bitcoin at 67%. Many of the other alt-coins fared much worse.
When we look at the charts and see it graphically, the point is driven home.
Many millions were made by the run up in the cryptocurrency prices. Those who got in early, and sold, ended up making a fortune. This is what usually happens with bubbles. Now people are questioning whether this entire segment will bounce back.
At the core of a lot of this is the mining costs. Ethereum has dropped to the point where it is no longer economical to mine. When the cost of hardware is factored in, miners are taking a loss on each coin generated. Some will claim that miners will keep mining because they believe the price will go back up. Maybe this will be the case. Still others say that the algorithm could be changed to make it easier to mine. Will that have the desired results?
The leads to the bigger question of the market leader: Bitcoin. Is it going to see a point where mining is not profitable? Some believe that it is impossible for that to happen. The price of Bitcoin cannot go below the mining costs. Then why did it happen to Ethereum?
There is a lot of uncertainty among these coins. The global consumption of electricity to generate these tokens is growing astronomically. If the profit potential is removed, will they continue to do it?
We also see many Bitcoin advocates promoting the idea of the Lightning Network. This is a total unknown. It might end up being the nirvana these seek but it is too early to tell. This is a grand experiment (all of cryptocurrency is really).
Where does the market go from here? That is the question everyone is asking.
Here is more on this subject.
The 2017 run up was purely speculation based (had no real ties to development, use-cases, active users...), any future run ups in the crypto space will likely be quite different then the 2017 one and will require actual advances in development, actual real-world use cases, and actual increases in daily active users to cement the validity of each coin beyond purely speculation.
Basically I don't think the cryto space is dead in any sense of the word but actual valid uses will be needed before the space will be able to explode upwards again like it has in the past.
Agreed. And given the recent news of Wall Street and other global financial institutions positioning themselves to enter the market... it's difficult to imagine they'll invest in the space yet not leverage the technology for themselves.
"...Bitcoin. Is it going to see a point where mining is not profitable? Some believe that it is impossible for that to happen. The price of Bitcoin cannot go below the mining costs. "
Whoever says ^ is a NUTCASE.
As in, hypothetically lets say a rich nutcase, goes all in buying mining gear driving the price to mine 1 BTC at $10K. Just because the small percentage of coins mined from then on cost $10k doesn't mean the 16M odd coins already in existence should each now be worth $10k.
Theory says miners will be switched off and cost of mining decreases until equilibrium is reached....BUT in the crypto/BTC space, theories rarely hold - a lot of crazy things go on when a handful of whales can easily manipulate thousands of naive people who have dollar signs in their eyes.
looks like dash pumped, then it dumped into pumping ripple, which dumped and pumped into alts, then the fork happened, then the next few forks and ICO's REALLLLY created demand and speculation for all the market....hopefully it tanks a bit more so I can really load up for the next run
I am hoping to see a annual fall bitcoin pump this year November-December on schedule.
the Ethereum and bitcoin and ripple curves are different, ripple looks like it is headed to zero whereas the others have retained much of their value.
"...November-December on schedule."
-> seems that's becoming a bit of a self-fulfilling prophecy: everyone knows its happened before, thinks it'll happen again, so buys in. Then everyone else buys in until peeps go 'hang on, why's the price increasing???
Then the selling starts and we wait until the next November for the fun to start again.
Does crypto have any purpose other than the November-December pump?
I LOVE it. 😆😆
Think about how much people would freak out if the bear market went through December. They'd be crying armageddon in the streets!
Eeeeek... it would definitely break the 'mould' and everybody's belief that there is a known regular cycle with BTC.
I'm of the opinion there will be no bull run this Nov-Dec. A tide has turned IMO.
Only a few months away in any case... watch this space as they say.
Thanks
I hope not, I will start the power down in November!
i agree
What gives me some hope, is when you look at Bitcoin's long term chart, after it hit $1,000 for the first time, it then sank to around the $2-400 range for a few years, before going on the run we are all now familiar with.
I hope this is a similar situation. If so, it's a great time to keep accumulating while large financial institutions (NYSE/ICE, etc) get in and developers are doing the work of making it more of a mainstream currency.
I liked your post. We know a lot about bubbles. We've seen them, we have a good understanding of what they do. The reality is, it's still early. Volatility is the norm and is desirable. As various crypto currencies take hold...we'll still see winners and losers...the main thing is when you recognize that bubble...either sell high, or hold...
There is nothing stopping the price of bitcoin from dropping below the price of mining.
Agree
Electric consumption is a big issue!! It is one of challenges that cryptoworld have to solve!
Other methods, technologies and mines machines have to appear and give more efficient to this process!!
Seriously this is the question in my mind too... Where does it go from here... I entered crypto in Novemeber 2017 and I am in for long term holding all my investments.... Almost all optimists are saying that bear is over and bull run will start in September but can't see any signs... Will crypto survive and was it all really a bubble or is it just a temporary phase... Keeping my fingers crossed and hoping for the best....
Looks exactly like the charts from the Dotcom boom. You could rub out 2017/2018 and put 2000/2001 in their place and nobody would know the difference between a crypto chart and a NASDAQ chart.
@finprep the is the question in my mind too but I think this opportunity for people who miss the train last year I believe by end of this year we will see same out comes again or maybe even higher than that what do you think?
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Bubble is good in the sense that it gives the market chance of breath and reset the whole market again. This trend is exactly what happened during .com and earlier stage off modern stock market. Sure some will suffer during the bubble but when it rise again, it will better than ever.
just another market was driven with manipulation and speculation in short term but i still believe in long term for blockchain in the future
Great post!
Thanks for tasting the eden!
'Bitcoin price will be fluctuating vigorously before the coming financial crisis. It would go up steadily during the crisis and skyrocket to the highest astonishing point before the end of the crisis. Afterwards, it would fall off a cliff...
Hi @finprep it is looks like pumping and dumping stocks that was traded in exchange... now the crypto exchange more similar than than that even more .... is it pumping duming or some thing else???
THANKS FOR THIS HELPFUUL POST
Good post. Do you expect a bull market in sept/oct? Perhaps I should invest in the very low priced altcoins right now and make my salary for the year by December when I sell it all. Or another possibility is I just lose all my money by investing in the altcoins. Hopefully it is the former.
so are the bears tiring out or whats going on?
Back in december/januari everyone around me was talking about crypto's. When I was at the gym, at work, at the post office I head conversations around me about investing, crypto's and making crazy profit.
Now it's silent again and the bubble is indeed over but I hope crypto's did'nt lose a momentum to make a break trough to masses. Eventually if you they will have to be adopted by a larger part of the population.
Good post...agree...
Everything is relative
I would say that the 2017 bubble is officially popped. The next move could be a big swing in either direction. With times like these, I just focus on the long term game and not let my bag's emotions get in the way!
@finprep
Hi!
A very thought provoking post. The mood in the crypto market is pensive and of doom. People who got caught in the bubble buying at the peak and unable to liquidate their holdings are the ones who are crying foul.The others who sold their holdings at the peak seem to have laughed their way to the banks. Apart from being a currency these cryptocurrencies now form an alternative asset class .Like all asset classes they have started getting governed by the supply and demand rules.The recent crash in the crypto market is a long due major correction which was shouting to happen after the recent sudden and massive run up in the year 2017. I personally believe that the recent fall is an opportunity for long term investors to start nibbling in this asset class for long term portfolio gains and any further fall should be used to add positions.The reason behind my belief is that the blockchain technology is here to stay and therefore i see value in these currencies.These currencies are much more efficient then any known fiat currency and in future the use of these currencies will only be increasing .So folks dont feel doomed ,this is the normal cycle of any asset class and holding for long term will lead you to better days
Thanx
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We can't expect anything because we all know that cryptocurrency is all about pump and dump but even it is like that we should be smart on deciding what to do.
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