Reflections on a very bad year for cryptocurrencies
Bitcoin started the year on a high note. In December 2017, the price reached an all-time high of almost $20,000 after the crypto started trading in the CME and CBOE. The expectation among crypto watchers was that this would lead to more demand for the currencies.
The new year ushered new challenges as regulators in the key markets started targeting the industry. This was followed by a sudden decision to ban Initial Coin Offerings (ICOs) and other crypto-related ads by platforms like Google, Twitter and Facebook. As the series of negative news continued, investors holding the coins started to rush for the exit. This was particularly important because most of the holders were ordinary people who invested in the currencies because of the fear of missing out (FOMO). In other words, these people did not buy the currencies because they believed in the vision of the founder. Instead, they wanted to benefit as the price climbed.
The final blow came in November when the miners and software developers of Bitcoin Cash decided to fork the currency into two. A fork is when the software running the currencies is tweaked to create a brand new currency. This is a similar process that had created bitcoin cash a year before. The new forking made even the core believers of the crypto industry cautious. This pushed the price of all currencies down and the market valuation dropped to yearly-lows.
The drop in the currencies was probably a good thing for the industry. This is because a look at most of the currencies tracked by Coin market cap revealed outright scams or currencies that solved no apparent real-world problem. Therefore, as it had happened almost 20 years before during the dot com bubble, the drop will likely reveal the currencies that have value. This will likely lead to a better, stable and more predictable crypto industry.
The price of bitcoin slumped from a high of $4225 to the current level of $3690. This price is below the 50 and 25-day simple moving average while the RSI has dropped to the 37 level. The price will likely continue to drop as traders position their trades for the coming year.