2018 is all about the heavy losses in the crypto market. And just when a lot of people were hoping that Bitcoin won’t slide below $4,000, it finally happened on Sunday. Bitcoin fell by 10% and recorded a new low for the year at $3,447.58. This has been the lowest for Bitcoin since September 2017.
Bitcoin started losing its stability at $6,200 to $6,500 after the Bitcoin Cash hard fork. In just the last seven days, Bitcoin has lost more than 35%. It is quite a historic week because it is the biggest one-week drop since April 2013.
A few months back, a lot of experts thought that there was already stability within the crypto market as Bitcoin showed low volatility. But this was a premature assessment after Bitcoin found new lows for the year.
Bitcoin Isn’t The Only One
Bitcoin isn’t the only cryptocurrency that has been seeing red over the last week. You also have Etehreum and Ripple. Ripple was down by 12% and Ethereum has been recently down by 9%. Since the beginning of the year, Bitcoin has already lost more than 75%.
For the recent drop, it is possible that Bitcoin going below $4K may have triggered “stop losses”. Here, Bitcoin was automatically sold in order to minimize losses.
As for the past losses, there could be a number of reasons to blame for such occurrence. For instance, you have the Securities and exchange Commission announced crackdown on ICOs that are selling unregulated securities. Two companies were already fined.
In addition to this, there is renewed interest whether or not the 2017 rally of Bitcoin to near $20K was because of market manipulation. The US Justice Department has been investigating tether, which is a stablecoin that is backed by the US dollar. It has been believed that it was used in order to prop up Bitcoin.
Regulatory Clarity and Institutional Investors?
Many are waiting for regulatory clarity. It is believed that regulatory clarity can bring in institutional investors that can salvage the crypto market. Tom Lee is a believer in the crypto market. In fact, he believes that Bitcoin could still reach $15K this year despite the recent drops.
Unfortunately, help coming from institutional investors aren’t really revitalizing cryptos in a manner that was initially predicted by some crypto experts. Ripple has partnered with some institutions including Santander and Western Union. They also have been rumored to have partnered with Bank of America. Though this could lead towards adoption, will this be enough to get the crypto market back from its knees?
If you are optimistic about cryptos, then maybe, you may want to look at the behavior of whales when Bitcoin’s price fell from $6,000 level. It was reported that whales took the opportunity to buy Bitcoin while it was still low. This means a lot especially if you are going to look at Bitcoin as a long-term investment.
And also, if you will look at the history of Bitcoin, you will notice that there were corrections in the past that rendered a significant amount of losses. For these reasons, it seems that it is only a temporary thing.
