Virtual currencies collapsed in just a year more than 90% in some cases. While Bitcoin (BTC) registered smaller losses, it has also been affected by the bear trend falling 80% from its all-time high. Due to this situation, investors are using different financial tools to survive this bear market.
Some companies started to sell derivatives linked to virtual currencies and squeeze something out of these falling assets.
Sam Bankman-Fried, the Chief Executive Officer (CEO) of Alameda Research, mentioned that those sitting on tokens saw that their business depends on the prices of virtual currencies. This is why these players should always have some cash in case prices keep going down.
According to a recent report released by Bloomberg, miners and companies that raised funds as Initial Coin Offerings (ICOs) in 2017 and the beginning of 2018, are those that are starting to get creative and keep operating in the market. There are some ex-Wall Street professionals that quit the traditional market and entered the crypto space and are currently offering options trading.
Some of these players are QCP Capital and Akuna Capital, two companies that were started by former employees of hedge funds and high frequency trading shops. Bitcoin futures contracts such as the ones offered by the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) started back in December 2017. Meanwhile, options trades started to appear just six months ago.
Miners have also been affected by the bear market. Indeed, Bitcoin’s hash power dropped around 50% between August and December 2018. As Bitcoin dropped around 40% during the second week of November 2018, mining Bitcoin was more expensive than the Bitcoin received as a reward. Many miners decided to leave the market and close their mining farms.
After it, the network difficulty dropped, allowing investors to enter the mining market once again. Mining activities became profitable with the current prices, allowing the hash rate to grow once again.
Clearly, the market has been affected by this bear trend in the market, that became the longest in Bitcoin’s history. There are several experts that predict that in the future prices will start to grow once again. Nonetheless, analysts believe that before a bull market, Bitcoin could fall under $3,250.
At the time of writing, Bitcoin is being traded around $3,631 and it has a market capitalization of $63.69 billion.