In the past two months, the crypto market had its moments of stability. It is supported by investors’ optimism that capital coming from institutional investors could actually make a difference to the volatile market. Coinbase has been reported to be working with Japan’s regulators as well as the US SEC. But things aren’t looking good still.
After a brief recovery after Bithumb hack caused the crypto market to drop, the entire crypto market has continuously dropped losing around $17 billion in just 24 hours. And as expected, major cryptos such as Bitcoin, Ethereum, Ripple, and Litecoin suffered losses.
Bitcoin dropped as low as $6,085 and $6,000 is being considered as an important line of support. Ethereum, on the other hand is down to $471.59 while Litecoin even was able to hit a 7 month low at $75 before recovering to $84 currently. So far, Bitcoin has lost more than half of its value since the start of 2018.
What Caused the Problem?
There could be different reasons for the bearish trends on the entire crypto market. One, Japan is quite adamant regarding their regulations. Japan’s financial regulator ordered six digital currency exchanges to improve their system in order to address anti-money laundering concerns.
The recent hack on Bithumb wasn’t also helping the crypto market’s situation. The South Korean cryptocurrency exchange lost $31.5 million-worth of digital currencies from hacking. And also, there’s Coinrail that happened in less than two weeks, which is another South Korean cryptocurrency exchange.
Chris Tse who is the founding director of the Cardstack project in New York describes the situation that “Often swings in prices are blamed on events like hacks of crypto exchanges, or news from regulators”. He also added that “If the crypto market were a NASCAR race- there would be a yellow caution flag waving right now. There was massive exuberance, then massive crash, and now we’re cleaning up the debris and figuring out what’s going on”.
Insufficient inflow has been seen by Fundstrat Global Advisors managing partner Tom Lee as the reason for the crypto market’s bearish trend. He said that “Incremental retail and institutional demand was expected to materialize in 2018, but regulatory actions by the SEC (Securities and Exchange Commission) have impaired progress”. He also added that “The SEC has taken needed steps in 2018, targeting ICO (initial coin offerings) scams, but the uncertainty around which projects are securities versus commodities has created substantial uncertainty”.
There were reports that there is a possibility that Bitcoin price could even reach $5,000. But despite this possibility, there are still experts that are still optimistic about the future of cryptocurrencies.
Melissa Lee, the host of CNBC’s Fast Money “held a funeral” for Bitcoin. She noted the predictions made both by Mike Novogratz and Tom Lee that Bitcoin is headed towards $40,000 and $25,000 respectively. And also, she poked fun at “cryptocurrency characters” such as Bitcoin Jesus and The Oracle of Bitcoin.
Is it really the end of the line for Bitcoin and other cryptocurrencies or should it signal investors to HODL or buy while everything is low.