300Billion in Market Cap Lost in Cryptocurrency in 2018

Now before we either all panic of HODL our funds I think it’s time to take a step back.  I don’t think cryptocurrency is going anywhere regardless of the bad news and government threats.

But with that said let’s take an even further step back and ask what has worked, what hasn’t worked and why has this happened to the market?

There are a lot of factors but I’ll speak about the ones that I think are most significant.

Bad News

The news is key here because a lot of family and friends are worried that all of us crypto holders have lost all of our money.  Even with Bitcoin around the $7-$10K mark, unless you bought in at the end of last year you’re still probably doing very well.  In general the market for most major currencies is up well over what it was in the first 3 quarters of 2017.  However, there is no denying that the charts look a little bearish but I think there will be a breakout in the coming months.

Government/Finance Manipulation

Much like the news, government and big financiers are having a big impact.  We know hedgefund investors have poured in billions.  Whether by intention or not a lot of them could be pulling money out of certain currencies to create an artificial crash and panic selling.

Too Many ICO Scams

I used to feel the word scam was used too liberally in the digital age of many honest IT companies.   However, in terms of ICO even the Ethereum Founder, Vitaly Buterik says 90% of tokens on his network are scams.  This is a very rational reason that will have a huge chill on investment. I would say blame a good portion of these problems on Ethereum honestly.  The unregulated and wild wild west of ICOs have brought government wrath and regulators banging on the door of all crypto stakeholders.

Lack of Common Sense and Proper Business and IT Practices

It is very clear to me in looking at how a lot of teams and ICOs operate that a good portion of people holding power in the cryptoworld have no clue.  If they did a lot of common sense things would be happening and they simply aren’t.

Such as Coinbase’s decision to open itself and its investors for huge losses and liability by selling Ethereum ERC20 Tokens.

The very idea of “free for all” in the cryptoworld reminds of the 90’s of the wild wild west of the World Wide Web and the lessons I thought we all learned.  Admittedly, and clearly, a lot of people have forgotten or were not old enough to be around for that.

I could say more but it’s so clear that essential business and IT practices have been thrown to the wind.  This is a huge impact on a lot of the issues the cryptoworld has been facing.

The Coming

I am still very optimistic about the long-term crypto outcome, but there are a lot of self-created and external factors at this moment.  I do think it is temporary but a dot bomb in crypto will certainly be repeated and appear.  The currencies and teams who didn’t learn from the 90’s will likely be the first ones swept away, leaving way for the next generation of cryptocurrency that simply just works for people and business.

Bitcoin, Ethereum, and Altcoin Crash – What You Need To Know

So essentially overnight Bitcoin lost 40% but at this point is still at this point at nearly $15000 and I believe will recover the $20K mark before the New Year (probably).  Some people have asked me what “FUD” is and blame it for the drop which stands for Fear, Uncertainty and Doubt.  I’m not buying that.  I also want to give a shoutout to Max Kessler who called a lot of things right about Bitcoin and predicted a sharp correction around the $20K mark but insists Bitcoin will keep running much higher.

If you look at the charts for the top 100 cryptocurrencies you will see an almost simultaneous drop in all of them.  Now if this just happened in the top 10 or a handful I would believe it is people taking profits randomly (nothing organized or not VERY large sellers).

Could Charlie Lee (creator or Litecoin/LTC) have triggered this? Yes I believe so and I don’t understand his reasoning for selling all of his position.  It’s no conflict to own your own coin and try to make it succeed.  To many acute investors they would have viewed this like a company about to bankrupt and the executives dump all of their stocks.  I certainly don’t think this was Charlie’s intention or concern at all though.

Look at the chart of the top 10 or even top 100 and they look eerily similar.  Massive selloffs with similar percentage losses of up to 30%.  The only good news or winner here is that Ripple (XRP) hardly lost anything and recovered faster than the others.

So am I worried about crypto or that there is a bubble? Yes and no, I think it has a number of years to run before the risk of a formed bubble bursting happens (and it will be massive bleeding when it does…).  But what triggered this current drop of all currencies simultaneously?

My theory is that billions of dollars of hedgefund money has come in, and in the last few weeks the currencies had significant appreciation and like some stock traders, these managers took massive profits which will look very great to the portfolio and their clients.

Now this is where it gets scary because if a small amount of people precipitated this event then it becomes easy for a small group of people to control, manipulate and play the market.

I’m not shaken from what happened, nor do I believe it was the “FUD”, I’m still long on crypto including Bitcoin but as always proceed with caution as we are heading into completely uncharted territories with massive volatility being the norm for now.  I will believe more in the FUD as Bitcoin gets higher though because those who have bought in at such high levels have a lot more to risk and worry about.