Why is the crypto market very quiet as the price of Bitcoin is dropping?

Why is the crypto market very quiet as the price of Bitcoin is dropping? This question has recently been widely discussed in the blockchain community and cryptocurrency media because there are too many of them in the bear markets.

Market capitalization dropped from $820 billion on January 7th to $280 billion now on March 18th. It’s approximately 70% decline, and bitcoin reached the lowest point since 2016, $6750 on March 18th.

And it has recovered by 50% since then to $9,770 at the time I am writing this article today. So why is that?

 

3 reasons why cryptocurrencies are down

After a turbulent few months, cryptocurrency investors are hoping to see some movement in their investments. It’s not happening though and experts have said that there are 3 main reasons why it isn’t.

The first reason experts believe cryptocurrencies are down has been said to be the Mt Gox sell-off. This was a result of a civil rehabilitation claim, which is used when creditors cannot agree on how much they should get back from a bankruptcy estate.

The second reason why experts believe cryptocurrencies are down has been said to be regulatory uncertainty. In South Korea, regulators have banned ICOs, saying that they may violate financial laws in place but haven’t outright banned cryptocurrency trading yet—and still appear undecided on whether or not they will do so or not.

The third reason why experts believe cryptocurrencies are down has been said to be China’s crackdown on mining. Last year, China made mining illegal in an attempt to reduce energy consumption in its country.

However, recently Chinese miners were granted permission by authorities to continue mining outside of China if they had already started operations before September 2017.

All three of these reasons point towards one thing: regulatory uncertainty and risk surrounding cryptocurrency investment right now—but if you look at what happened with bitcoin last year (when it dropped from $20k all the way down to $6k), you’ll see that investing in cryptocurrency is still a good idea for those who can stomach short term volatility.

 

3 questions about Ethereum's future

Why are people still bullish on Ethereum despite its low value and high volatility? Why hasn't it dropped by more, as other cryptocurrencies have in recent months?

And why does Vitalik Buterin, Ethereum's creator, remain confident about his creation even with a 70% drop in its price since January 2017? I spoke to experts to find out. Here are three key questions they asked me.

One interesting thing I learned was that while there may be lots of companies and products built on top of Ethereum, most users interact with it directly through Ether or ETH, which is kind of like how most people interact with PayPal directly through USD.

They said that what we’re seeing now could be considered similar to when PayPal first launched — it took time for people to realize they needed a new currency to use alongside USD because most merchants didn’t accept PayPal yet. So maybe in 5 years or so we'll see widespread adoption and stability among merchants who accept ETH along with BTC as payment options!

 

4 key moments in cryptocurrency history

1. In January 2009, Satoshi Nakamoto introduces Bitcoin on a cryptography mailing list and other cryptographers immediately notice that it uses an innovative distributed consensus mechanism called a blockchain.

2. On 18 August 2010, a vulnerability in how clients verify transactions becomes known, spurring intense media coverage and raising concerns about security risks to cryptocurrency users and their coins.

3. The following year, on 6 June 2011, one user buys two pizzas for 10 000 BTC which at that time was worth $41.

4. Finally on 19 February 2014 Mt Gox – then one of bitcoin’s largest exchanges – filed for bankruptcy protection from creditors in Tokyo after losing around 850 000 bitcoins (around 7% of all bitcoins) belonging to its customers due to theft which went undetected for years.

The incident sparked a sharp drop in bitcoin’s value but also raised awareness about cryptocurrencies among people who previously didn’t know much about them or had been avoiding them altogether because they were too volatile or complicated.

 

Cryptocurrency lessons to learn from 2018

What a year it has been for cryptocurrency. An unprecedented bull run has given way to some equally precipitous pullbacks, and 2018’s final month was no exception. When I wrote about cryptocurrency in January, things were looking good. For one, Bitcoin had just cleared $10,000 for the first time ever.

At that point, it seemed like there was no limit to how high it could go. It seemed that things couldn’t possibly get any better than they were at that moment—and then they did... but then they got even worse! It’s hard to overstate just how volatile 2018 has been for cryptocurrency holders.

There have been brutal drops; there have been exhilarating highs, and there have been long periods where nothing much happens at all. That’s why I think it’s worth taking a step back from our day-to-day lives and asking ourselves: what can we learn from what happened in 2018?

What do we need to know going into 2019? How can we use what we learned last year to make smarter decisions moving forward? Let's take a look at five key lessons from last year.

 

6 predictions for 2019

The year 2019 has only just begun, but that doesn’t mean it’s too early to look at what might be on the horizon. We took a look at six major factors shaping 2019 and beyond—and how each could affect bitcoin.

The death of cash: At some point in 2019, Mastercard plans to launch its Mastercard Blockchain Payment Card, which will link a user’s fiat currency wallet with their blockchain account and allow them to spend cryptocurrency directly from their blockchain balance.

1. Current downward trend will continue in 2018 before slowly starting to turn around.

2. Increased regulatory oversight from nation-states and centralized exchanges will give rise to a new breed of decentralized exchanges and self-custody protocols like 0x, AirSwap, Kyber Network, Digix DAO, Augur, and MakerDAO.

3. Cryptocurrency derivatives that are highly liquid with low leverage built on top blockchains will emerge in 2019 (similar to LedgerX).

4. Two major hardware wallet providers—Ledger and Trezor—will enable storing coins across multiple blockchains in 2019.

5. There will be more than 100 cryptocurrencies valued at over $1 billion by end of 2019.

6. A number of countries will adopt or test digital currencies as legal tender in 2019. China, Estonia, Canada, and Russia are all considering adopting their own national digital currencies while Venezuela has already done so through its Petro token sale last year.

 

Important Reasons to invest in cryptocurrency

It's a long list, and we'll get to those in a moment. First, let's look at why there's so much skepticism around investing in digital currencies like Bitcoin or Ether.

It all starts with understanding what cryptocurrencies are. Cryptocurrencies such as bitcoin use encryption techniques to regulate digital transactions. They're mined by computers using complex algorithms.

And they're not backed by any government or central bank, which means their value isn't tied to anything tangible (like gold). That also makes them vulnerable to wild fluctuations in value—up one day, down another—which makes some people nervous about putting money into them.

And that brings us back to why there's been so little interest from institutional investors: Until recently, it was nearly impossible for most large institutions to invest directly in cryptocurrencies because of regulatory concerns.

But now that major financial institutions have figured out how to do it safely (and legally), many more investors will be able to jump on board and start making money from these volatile markets.

 

11 myths about crypto

Many within traditional finance believe in a litany of myths about cryptocurrencies, usually proffered by those that are unable to see why any alternative to fiat money could be useful. Let’s take a look at some common ones:

1. Blockchain technology isn’t real

2. Digital currency isn’t safe or stable

3. Cryptocurrencies have no intrinsic value

4. There is no place for cryptos in modern society

5. Governments will never allow it

6. Regulations need to be changed first

7. They are used by criminals

8. Allowing them would cause an economic crisis

9. Nobody uses them

10. The only thing they are good for is illegal activities

11. Why are we seeing such a big drop in value right now? Should I still invest in Cryptocurrency?

Questions like these have become commonplace for those interested in investing and watching cryptocurrencies.

Even if you don’t own any coins, you may be wondering what happened to cause such volatility. Here are some myths about cryptocurrency that could have played a role in today’s events

 

Conclusion

It’s been a rough few days for crypto investors: Over $200 billion was lost in just 24 hours, and some experts are forecasting that a crash could happen soon. What’s especially concerning about the latest downturn is that it looks different from other crashes we’ve seen in 2017 and 2018.

First, there wasn’t an obvious catalyst for Monday’s sell-off—traders had been expecting regulatory announcements out of China, but those never came. Second, instead of a sharp drop, we saw steady losses over 24 hours.

Third, during previous crashes (and corrections), altcoins have dropped more than bitcoin; they were less correlated than ever on Monday when most major altcoins rose against bitcoin.