After setting records in the market in December 2017, the cryptocurrency market appears to have dipped to an all time lows in a span of less than six months. The market value of major cryptos skyrocketed and those who had invested were singing all the way to the bank. However, there were those that had missed out from the boom.
By December 7m Bitcoin was trading at $19,850 and other major coin prices were also skyrocketing. At the same time, there were warnings against investing on such volatile assets like digital coins. Enter 2018 and every coin started dipping to worrying levels.
Huge Loses in the Market
The market value hit a whopping $834billion early January according to CoinMarketcap historical data. However, the value had dipped by over 66% thus shedding more than $554billion. The most hit coins are Bitcoin and Ethereum who have already shed over 50% and 40% respectively.
These loses seem to have thrown the market into a panic mode and crypto market critics argues that this could be the point where the bubble bursts. Well, there were warnings from seasoned crypto expert and this slump could be the turning point for the digital market and the hype it has attracted since the invention of Bitcoin.
According to the founder of Evercoin, Miko Matsumura:
“The market before was clearly overheated. The only fear in the market is ‘missing out’. These speculations led many to rush into the market resulting into price inflation.” However, he adds that “the market is stabilizing since the panic is wearing off.”
According to experts, investors are panicking which is not healthy for the market. However, this has created two sets of consumers in the market; those who are taking advantage of the drop and those who are counting their loss. However, this could be the launch pad for future gains.
Market Regulation Role in the Downturn
The market had played along without any streamlined regulation and it is about time to change. Regulating the market will tame the crypto exchanges; entice institutions into investing in cryptocurrencies. This is one of the measures perceived to protect the market from the free falls every other month.
Dager Contreas, the Ocular co-founder says that security and compliance are key factors that can increase adoption and uptake; he adds:
“As exchanges and wallet continue to improve their security measures, which include stronger KYC (know your customer) and AML (anti-money laundering) systems, investors will feel safe knowing that the likelihood of being hacked is reduced.”
Once a good regulation level is achieved, breaking securities laws and other malpractices will become a thing of the past. Cases of transaction manipulation have been recorded and this also has impacted negatively on the market performance. With the Mt. Gox saga still fresh in the minds of many, a lot need to be done.
Security Lapses and Hacks on the increase
Safe keeping of digital assets is a big investor concern. There are so many weaknesses in huge centralized exchanges and this exposes investor funds to hacks and a change to non-custodial exchange outfits appears to bring back investor trust and confidence back to the market.
The loss of over $350millionn worth of digital coins from CoinCheck is a good example of risks investors are being exposed to. Such security lapses need to be handled to turn crypto adorers into adopters in the future. These are also giving the market negative publicity.
Many crypto enthusiasts read malaise on the ICO ban by the Chinese authorities and this has affected the cryptocurrency uptake. This of course shook the market and the ripple effects are being felt globally. However, the market appears to be stabilizing with Bitcoin, the market leader showing some marginal gains which other coins are benefiting from.
Once players adhere to market fundamentals, there is still hope of a breakout and institutional capital will be a huge boost. However, instilling investor confidence at the moment appears too centered on individual coins that are industry specific and have real world solutions to offer.