The recent crypto market crash in summary.
If you were to take a look at the dashboard on http://coinmarketcap.com/ I would not blame you for frowning in concern at the lists of red to be found there, but do not despair….yet.
Recently bitcoin and Ethereum reached all-time highs almost at the same time of over $3000 and $400 respectively. This good fortune was shared by many of the smaller currencies that rode on the coat-tails of the larger more popular currencies for eg: Bitshares that had at one time gains of over 140% in a 24 hour period! That’s crazy good.
The news of the new crypto highs brought millions of new miners and investors to the cryptocurrency universe, itching to cash in on the success of the markets. No one wanted to be left behind by the runaway gain train! The bullish attitude of the new investors pushed the market up and the dashboards at coinmarketcap were awash with fields of green. (Yes even Potcoin was doing well ;) )
There was a problem however.
With all the new activity some of the industry pillar organisations were not able to cope with the influx of new traders and the demands on infrastructure grew exponentially over a few days causing many reports of degraded services and even outages on exchanges and pools.
This did not sit well with allot of long term investors who started having flashbacks to the Mt Gox incident where the largest exchange in the world at that time suffered a devastating loss, taking all their users down with them and being forced to close.
The degraded services and outages at major exchanges contributed to turning some investors bearish and the market slowed down because of this as they cashed out their crypto.
The new investors however contributed to the market down trend as well, and this is why.
New traders are always nervous, they don’t want to lose their hard earned Fiat and not having a feel for how these markets live and breathe, most new investors or miners will follow the trading patterns of some of the market celebrities or whales. (I mean they must know something we don’t right?)
If the above is true, then I’m sure you will see what happens next.
It took just one thing to set the whole market ablaze with red, and that one thing was the Ethereum flash crash on Wednesday 21 June. Ethereum had an epic speed wobble on a GDAX exchange where it rapidly dropped its value and began trading at around $0.10!!! This sent shock waves thought the crypto universe and user confidence was wiped.
This was the last straw for the not yet battle hardened and old school traders alike. Everybody, their Granny and their cats lost confidence in the markets and so they all tanked. Leaving us with the red dashboards we have today.
I would like to close this summary with a sentiment of hope and a little advice.
The red markets we see today are just part a natural process of gains and losses while the market adapts to new challenges and consumer confidence.
Don’t panic and through away you’re hard earned crypto for a reduced rate. Show some resolve and see this downturn though this will help contribute to market support and you will make your money back on the upturn. You will be pleased you read this when you do.
I mean if Arnold Schwarzenegger can ‘be back’ as many times as he has, so can Bitcoin & Ethereum!
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