Cryptocurrencies endured further misery yesterday, as most coins registered double digit losses once more, with many of them now completing a full retracement back to their valuations before the 2017/18 bull run. Bitcoin saw a 14% drop to push its annual low down further to $4,800, a valuation last seen in mid-October 2017, with others suffering similar fates. Second placed XRP fared better than most, remaining loss-free throughout the sell off, as did some smaller coins. The overall market cap has fallen 15% since Sunday and now also sits at levels not seen since last October, further emphasizing the complete retracement from 2017-18.
Who Dropped the Market?
In the past, dips such as this have usually been met with a rush by various individuals and outlets to ascribe reasons, from an exchange hack to regulations or bans. Yet now it seems to have been largely accepted that events like this are in the nature of cryptocurrency, with no solid explanations forthcoming except a potential hangover from the Bitcoin Cash fork.
While renowned Bitcoin skeptic Nouriel Roubini spent some time on Twitter reveling in the drop and slating the cryptocurrency community, others took a more long-term perspective. Forbes stated that “while Bitcoin is down, big players continue to pour money and faith into blockchain”.
Road to Nowhere
The question of ‘where now’ is of course what investors will be asking. Prominent Twitter chartists have been putting out various theories, but the fact remains that no one, save perhaps a few whales, has the remotest idea. Further crashes down to the $3,000 or even $1,000 range can’t be ruled out, which would still put us at 2017 valuations, but equally we may be looking back at this point in a year and recognizing that this represented the perfect time to buy.
Long term sentiment is still positive, and even though every increment we fall down pushes a potential recover further away, it might serve to search back into Bitcoin’s history for some solace. On October 2, 2013, Silk Road founder Ross Ulbricht was arrested and the site was shut down, resulting in Bitcoin slumping 20% to $105, with many fearing that the cryptocurrency was on its deathbed. However, the drop kick-started a parabolic uptrend, with Bitcoin increasing its value by ten times in two months to hit new highs and break $1,000. It pays to remember that it’s always darkest before the dawn.