An year ago exactly, people were dreaming of buying lambos with the fortune they made in the crypto market. Gains of even 100% on the amount of investment were dwarfed by gains counting in thousands of percent. It was all appearing a fairy tale till a sudden crash came in January 2018. It created some fear but people were still optimistic of buying a lambo soon.
After some months of bear market, the markets seemed to recover a bit. Highs and lows kept coming but as the year approached its end, the markets started crashing badly making investors week at the knees. In an year’s time, the value of major crypto currencies fell more than 80% since January 2018.
We took opinion of experts throughout the blockchain industry to gather insight into what may have resulted in this fall.
**(The opinion of the experts are their personal observations and should not be taken as any kind of financial advise. Everyone should do their own research before making any investment decisions.)**
Here’s what people from the industry had to say:
(We’ll keep on adding more expert opinions, stay tuned! )
Humans of Blockchain ™
The topic is quite lengthy and sophisticated, but I’ll try to summarize it in the below points:
1) The MAJORITY of ICOs from 2017 turned out to be scam, non-serious or with incompetent founders. Basically, the result is that same. Investors lost their money
2) Due to point # 1, regulators started hammering on Crypto
3) Due to point 1 & 2, big investors started withdrawing from the market.
4) Due to point# 3, the price of crypto started to collapse
5) Due to point# 4 ICOs had to RUSH and sell their crypto holdings in order to cash out fiat currency
6) Due to point # 5 retail investors and crypto enthusiast has suffered HUGE loses, which made them exit with a lose, which force ICOs to sell even more, and we enter into a malicious circle here until we have reached to where we are today.
Other factors are:
1) In 2017, a lot of dirty money entered the market believing that they can hide under lengthy wallet addresses without having their real ID revealed. However, this has been proven to be not the case several times, which urged dirty money to exit the market and dump 100s of millions on a fragile market
2) Exchanges used to manipulate both the price and trading volume during 2017, the thing which does not happen anymore due to regulatory compliance matters. Such manipulations caused prices to artificially get inflated. And now we see the actual prices with no to minimum manipulation
3) Pump and dump scenarios used to be extremely common, however now its not there.
4) All ICO fraudsters have dumped their crypto on a fragile market and ran away with the fiat.
The current crypto crash is a correction which is in oversold territory. We believe that the decline in prices has not affected blockchain development on the enterprise front.
On the consumer front, companies which had poor treasury management and were speculating on the price of cryptocurrencies without securing 6-12 months of forward cash expenses are clearly feeling an effect through financial troubles. Overall, it has also helped to make the market more efficient through cleaning up some of the scam projects and bad actors.
The current cryptocurrency market crash was brought on by excessive speculation. Speculation far exceeded the reality and adoption of blockchain technologies, so once a little bit of time passed and people realized there was no real justification for Ethereum to be worth $1400, it just cascaded from there. However, nearly a year has passed since this bear market began, and during that time blockchain has come a long way.
Effectively, the market will absorb this crash by letting poor projects fail/fall away while good projects, the cream of crypto, will rise to the top. During a market crash, people sell off everything that they don’t consider to be essential, so it’s a good time to see how the market truly values projects.
Regards to the current bear market for cryptocurrencies, I’m not that concerned about it. Cryptocurrencies are evolving, the understanding and notion about cryptocurrencies are evolving as well. You will see a decline in the number of cryptocurrencies as a whole, there’s no need for 4-5k cryptocurrencies out there right now. Part of that is just the market competition as people are looking for real world use cases because it goes back to adoption. Are users, stores, manufacturers, retail locations etc. able to use your cryptocurrency to purchase products or services? So it’s sort of like Lord of the Rings, a fight for dominant cryptocurrency.
So overall super happy with the course of the cryptocurrency markets. For all those people who are discovering that they participated in someone’s research and design, well, tough luck for you. So this is one of those hard learned lessons, “If it’s too good to be true, it probably is”.
I have mixed feeling about that. When there was the first crash, I truly believe because quite a few of the projects cashed out. They got crypto and at some point, they converted it into fiat because they needed it to pay salaries, rent etc which unfortunately you cannot pay with crypto yet.
Let’s not forget there were two very big ICOs – telegram and EOS and both of them cashed out an enormous amount of crypto. So recently what we saw is the second stage of that, it is a market reset. The reasons we have to see but some people are saying that an ETF Bitcoin is eminent in the US. So people would want Bitcoin to be as low as possible to get in cheaper. Is anyone manipulating the market to push it down? I don’t know, could be. Some people also panicked and decided to cash out.
Honestly I don’t see the current situation as a crash, more of a correction to what it should be. Towards the end of 2017 and start of 2018 we were not in a bull market but complete mania. Projects had to do little more than say they were offering a cryptocurrency and they were fully funded within weeks, sometimes days. Where are most of these projects now? Nowhere. No, the decline of the overall market was the departure of hundreds of billions of dollars of wealth being wasted in my opinion.
The lack of actual business success across the majority of funded projects has meant little demand for tokens and a gradual bleeding of the markets. Ultimately this is a case of too much money coming into the hands of the wrong people.’ ‘That said, the market isn’t dead. Will all 10,000+ projects be around 5 years from now? No. Will the best of projects be a success? Yes of course. Once the front runners start generating real revenue models based on business success and not token trading, then we will be at the start of the blockchain revolution. Right now you, me, everyone else, we are all just picking our sides, backing our favorites and preparing for what’s to come.
Always be ready for the crashes but remember that stock markets do crash, gold prices do crash, banks and governments can crash so just like anything cryptocurrency market can crash any day.
However, my views are that cryptocurrency market is going through ups and down but because cryptocurrency is inevitable for our future, the market will always turn around and we will see positive gains again.
Real use cases! We need more real use cases!
It is all relative in my opinion. If you look at 2 or 5 year view bitcoin is still the best asset class. There was definitely great hype in 2017 and it was overbought to a massive extent due to FOMO but this is a new technology and if used correctly has massive opportunity and ability to redefine some industries.
GoPro stock is down 95% from ath, and the NYSE is down roughly 13% for the month alone – all investments carry risk but the talent comes in managing the risk, diversify and not being naive. Most blockchain companies are now only developing their products and the value will follow as they roll out within the next few years.
Crypto is the future of money however, money has been the dominant force since anyone can remember and the top 10 people in that sphere control the world and the overall word economy. 2018 has actually been a great year for projects and emerging technology that will ultimately drive adoption however weeding out the manipulators and scammers/fraud is still ongoing and will continue into the first half of 2019.
Personally, I’m not phased by prices at any point now or on the rise to dominance for crypto. Initially, I traded it like everyone else during 2016/2017, however I’ve held crypto and continue to do so until a point where it is adopted and respected/accepted as a true store of value and official currency.
Crypto for me is like a religion, i believe in it so much I will stop at nothing to see mass adoption in the next 5 years and so will many others in the market. Fear not crypto is here to stay and will be dominant eventually,please forget about the price its not important for the future. Giving people their freedom and power back regardless of their social standing is the true value of crypto not its relevance in how much profit people are making.
1). Crypto tends to rise and fall fast.
2). Bitcoins 4 year sudden inflation halving might provide an impetus to this boom/bust cycle.
3). ICOs helped drive the rise but they were overpriced for their state: no users, no products, concepts that didn’t even make sense.
ICO couldn’t usually return 1-10-100x when the valuations were so high, over $50-$200M+ (total supply*price). That means to get 10x from $200M a project has to be worth $2M. It’s more than some apps with 10M real users.
The ICOs that got the highest returns on investment (ROI), returned 6000x, 3000x, 2000x, etc, were NXT, NEO, IOTA, with raises of just $17K, $3M, and $500k . From these low points, there is much more room to get very high ROI.
Alts fell the most (but also tend to rise the most in bull runs). On a positive note, decentralized finance is just beginning. When the market is way down, after correcting for a huge bubble, it’s perhaps the best time to buy.
This is not financial advice.
CEO of CryptoHype
In 2018 the crypto markets saw a colossal decline. Bitcoin tumbled over 80% from its previous all-time high in December 2017. People are calling it the crypto winter. Bitcoin has been reported dead in the medi 341 times so far. If we look past the doom and gloom, the numbers in the ICO world tell a rather interesting story.
2014 – 30M invested, 6 ICOs, 5M per project. Highest amount raised – Ethereum, 18M
2015 – 9M invested, 7 ICOs, 1.2M per project. Highest amount raised – Augur, 5.3M
2016 – 100M invested, 52 ICOs, average 2M per project, Highest amount raised – Waves, 16.6M
2017 – 6.5B invested, 454 ICOs, average 14M per project. Highest amount raised – Hdac, 258M
2018 – 20B invested, 1003 ICOs, average 20M per project. Highest amount raised – EOS, 4B
Stats from coinschedule
The amounts invested compared to previous years are going up. The statistics above do not count the number of failed ICOs in the total. Stats vary widely depending on the source. According to ICOBench, there were a total of 5135 ICOs by the end of December 2018. That means that the success rate from how many listed as raising capital on the site that actually made it to reaching their soft cap is below 20%. As investment amounts have tripled compared to 2017 there is no possible way of saying that the interest is no longer there.
Looking at the historic price of bitcoin, this is also not the first time Bitcoin has lost most of its value. From previous all-time lows, bitcoin has bounced back to, well, the moon twice already. If it follows the same pattern in the future, bitcoin may rise to over $30 000 in price in 2022. I do not have a crystal ball, unfortunately, to see what the future brings. The price probably will not reach high enough for John Mcafee to not have to expose his genitals on live TV as he has promised, however, the game is far from being over.
|Year||All time high||All time low after the previous bubble||Decline in price|
|2017||$19800||$3200 – December 2018||83%|
|2013||$1100||$200 – February 2015||83%|
|2011||$31||$2 – December 2011||93%|