You either love or hate the cryptocurrency market. After a year (or more accurately, a lifetime) of massive capital gains and astronomical increase in value, the market tanked today. Just seven days ago, all coins and tokens were trading for above $700 billion. Today, it barely hovers around below $500 billion, having dipped as low as $450 billion.
Look at this price chart. Everything is down down DOWN!
"What the hell crypto???" People fume. "I put my hard-earned money into this thing expecting ten times return by tomorrow, why am I losing money???" They smash the nearest smashable object next to them, and then another one.
However, I am happy. As someone who believes in this technology, I celebrate. The three potential reasons behind the dip are actually good signals for the cryptocurrency industry.
- Fear on South Korean crack down on exchanges
The two largest exchanges in South Korea, a country with one of the largest trading volume in the world, were rumored to be raided by the police and visited by tax officials. The greater rumor is that South Korea plans on banning cryptocurrencies exchanges entirely.
Source: https://www.coindesk.com/south-korea-reportedly-expands-crackdown-bitcoin-exchanges/
This news along with various noises about China's banning cryptocurrency (again) contributed to scaring a relatively new and fledgling investor base. People believe that any government's resistance against cryptocurrency equates to its death sentence.
This is not true. Regulation, even complete prohibition, is good for cryptocurrency. Bitcoin might have started out as way to escape governmental scrutiny, but its functionality shifted its position to a trading tool much in need of rules and regulation. Other altcoins that followed Bitcoin are finding themselves in the same position. They have the potential to integrate into everyday lives and business operations that it makes sense to control what they can and should do. On the topic of altcoins... - Bitconnect exited
Source: https://thenextweb.com/hardfork/2018/01/16/bitconnect-shut-down-closed/
For those that do not know, Bitconnect is a trading platform that guarantees return. The more money you give them, the more money you receive. Simple. What esle is simple?
Bitconnect is a SCAM! You should not assert that you can make 1% return a day!
Sure, some cryptocurrencies return more than that amount, but its entirely speculative. Nothing is certain in this volatile market. I advise everyone who asks me about investing in cryptocurrency that there is not sure way to get a large return, if at all. A crypto investor must be willing to lose what he/she puts in while perform due dilligence to put resource in the right basket. Unfortunately, many scam projects have spun out of the interest for cryptocurrency technology and have successfully extorted money off of gulliable investors.
The shutdown of Bitconnect and the future closing of scam projects will weed out the unreliable investment in cryptocurrency. Thanks to that, the real technology will receive more resource and attention to grow and actually attain real values. - Bitcoin futures market are due soon
Bitcoin futures allow investors to buy Bitcoin at a pre-decided price. The first wave of futures came into existence about a month ago and will bear return in the next few days. A Redditor theorizes that big whales are manipulating the price to make the most out of this fact. Source:
The market cap for cryptocurrency is small enough that big institutional investors could play around with the market. That is not necessarily a bad thing. One, it removes the small players who are not dedicated enough to stick for the long ride. Two, futures help to stabilize the cryptocurrency market in the long run as it helps people to purchase cryptocurrency at their own valuation. The price consistency will support the 'currency' part of cryptocurrency, making it possible to actually use it for its original purpose - to exchange for goods/services.