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2018 Cryptocurrency Crash

|About: Bitcoin USD (BTC-USD)

2017 was a year of cryptocurencies. We experienced a great increase of the prices of these digital assets.

The value of the most famous cryptocurrency Bitcoin has risen up to almost 20 000 USD.

However, the beginning of the 2018 didn´t bring a positive continuation of cryptocurrencies growts. The set of negative factors caused a massive crash.

What were the reasons of such a vast sell-of?

2017 could have been a very successful year for Bitcoin with continuation to 2018. However, 2018 has been the exact opposite so far. The dark day in the cryptocurrency world was February 6, 2018, when the price of bitcoin fell to $ 6,000. The price of Bitcoin went from 19,343 USD in December 2017 to 5,480 USD in June 2018. This price, having dropped by 70%, caused that many people sold their Bitcoin in fear of losing more money. Between January and April 2018, the drop was linked to demand and therefore to the increase of frightened speculative investors, highly exposed to losses linked to purchases made at very high prices. Several reasons have been attributed to the sudden downturn in the cryptocurrency market. A day before the crash, several media outlets announced that some Asian countries were going to impose heavy regulations on digital currencies and their initial coin offerings. Considering that the South Korean cryptocurrency stock exchange Bithumb and some Chinese investors constitute a significant part of the total volume of cryptocurrency transactions, the news of a possible ban could scare many new investors. Another plausible reason for the decline could be rumors that China is seeking to ban cryptocurrency mining in the country. Although the rumor turned out to be false a few days later, it was just too little, too late. The digital currency community also speculates that Wall Street could be behind the largely lateral movement of the market. On December 12, 2017, the Chicago Board Options Exchange began trading Bitcoin futures for the first time in its history. In addition, its rival, Chicago Mercantile Exchange Group, which also owns the world's largest futures exchange, saw its first contract expire on January 26, 2018.

Cryptocurrencies reflect new trends, digitalization and innovation. Its success relies in the decentralization, anonymity and blockchain. Everyone who is interested in virtual news can take part in. We, from have recently decided to give it a try and start trading with cryptocurrencies in near future because we see a potential in it. We know that it is really essential to determine our readiness for both positive and negative scenarios. Because likewise to other markets, a volatility is connected with cryptocurrency market. Volatility of the cryptocurrency market is very high. It is linked to a concept of risk and potential returns which both are significantly high in the case of crypto market. The reasons why are various but we can mention that cryptocurrency market is an infant market, it is unregulated market with low liquidity (relatively to other markets) and very attractive for speculations. It is impossible to say that volatility is a bad factor. It depends on every individual and its risk tolerance. And that is the reason why cryptocurrency market is attractive to big scale of world´s population.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.