What To Expect From The Cryptocurrency Market In 2018

From bittox

In less than four months, the Bitcoin price has crashed 65% from its all-time high in December 2017. If history is anything to go by, the price is likely to experience further downward pressure in 2018.

The largest crashes in history have seen asset prices retrace 80-100%. And after a large crash, history suggests a period of slow price recovery or stagnation, coupled with asset consolidation and government regulation. This was certainly the case with bubbles relating to mass technological change which promised to change the world, as the hype around Bitcoin and the wider cryptocurrency market would suggest. We only need to look at the price activity of the Dotcom Bubble, 1840s Railway Mania and the 2008 Sub-prime Mortgage Crisis to verify this.

If the dramatic fall in the Bitcoin price is symptomatic of a wider crypto-currency malaise, here’s what we can possibly expect in 2018 and beyond.

2018-19: A PERIOD OF REGULATION
In 2018 we are seeing government regulation, or the threat of government regulation, dominate the cryptocurrency landscape and this should continue into 2019. This is having a negative impact on price across the market.

The Chinese government crackdown on cryptocurrencies in 2017 and early 2018 has resulted in the banning of cryptotrading and initial coin offerings (ICOs), ordering exchange closures and denying market participants access to social media sites. The government is now even targeting offshore trading accessed by Chinese nationals. To counter this, two of China’s largest crypto exchanges (Huobi, OKEX) have moved their operations to Hong Kong and have purportedly been able to circumvent the rules, resulting in surging trader demand. Continuing signs suggest that despite the government’s hardline stance, the underlying appetite from the general population for cryptos has not waned.

To understand the Chinese government’s motives, it is important to look at the threat cryptocurrencies and the wider digital economy poses to their monetary policy. The government’s main purpose with these initiatives is to protect their own interests through central control. They are doing everything in their power to protect the value of the Renminbi (the official currency of the People’s Republic of China) and external influences. The Chinese government’s belief in the technology is still very much present, with plans underway to develop their own national digital currency, potentially using Blockchain.

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