What Is Pushing The Whole Crypto Market Down?
It is no surprise that the cryptocurrency market is facing a crisis. The market cap is facing new yearly lows despite clear improvements in some sectors of the market. Surely, some force is pushing the prices down. Why is this happening? We’ll try to explain this to you.
Good, But Not Good Enough
It would be a simplistic vision to believe that the prices have something to do with the level of development that Bitcoin has right now. The crypto space never looked better, in fact, as it is developing more than ever and has some strong new blockchain initiatives in it. Things are even better than in 2017, a year in which speculation was very high and many scams plagued the market.
We even have institutional options like Coinbase, Blockchain.com and Circle. ICE, which owns the New York Stock Exchange, has also entered the game and CBOE and CME are selling futures contracts for Bitcoin.
Companies like Microsoft and IBM are developing highly advanced blockchain technology and many new exciting projects are surfacing. Things are looking great, so why are the prices so bad? Ethereum, EOS, TRON, IOTA and NEO have lost a lot of value and even Bitcoin, which lost “only” about 65% of its value during the year, is still pretty bad.
Clearly, the market sentiment is not so hyped about the market right now.
The ETF Issue
No one could argue that one of the main disappointments of the market in the crypto space is all about the Bitcoin ETFs. As the U. S. Securities and Exchange Commission (SEC) delayed most of the ETFs, investors are very afraid right now. 9 other Bitcoin ETF's were denied yesterday.
The decision to approve or not the ETFs has been delayed until September, at least. Even the most solid bet of the market, the VanEck / SolidX application for ETF is not 100% sure to pass. The delay and the insecurity of the investors have made the market lose a lot of value recently. Since August 7, the market has lost around $50 billion in market capitalization.
As the U. S. SEC is very cautious at the moment about the ETF, investors are clearly waiting and, as they wait, people are losing interest in Bitcoin. Unfortunately, Bitcoin leads the market. If the price goes up, all goes up, if it goes down, all goes down the drain together. This relation between Bitcoin and the whole market is very damaging.
Another facet of this main issue is that the whole market is in the red right now because of Bitcoin (which is in the red because of the ETF).
Blockchain Platforms Are Failing
If you look at the greatest losers of the year, you will find Ethereum and EOS. What do they have in common? They are more than currencies, they are platforms for development. While it can be said that both Ethereum and the EOS network have advanced during the year, users are simply not using the decentralized applications that were built on top of them.
Generally, the currencies which are only used as actual money are faring better. Bitcoin and Litecoin are good examples, despite heavy losses. Better yet are Monero and Bitcoin Cash, even if they still lost a lot of value.
Many tokens are little more than ideas right now and the prices show. While the blockchain technology is more than a bubble, what happened at the end of 2017 and the beginning of 2018 was a bubble. You can’t deny it. People heard about Bitcoin and they were crazy. Many invested a lot and lost almost everything. After bubbles, things take some time to become normal again.
Because of so many failures, dead hype and disappointment, it is clear why many people are simply not interested in cryptos anymore.
Recovery and The Future
We are fairly sure that the market will recover. However, being too optimistic is generally a bad idea. The recovery might be fast, but it might take months or even years. People saying that Bitcoin will be worth more than $100,000 USD apiece are simply speculators and believing in these people caused the problem in the first place.
The market needs time to recover, that much is sure. Many inexperienced investors were badly burned by downfall of Bitcoin and now are reluctant to come back. The same happened in 2013 when the Bitcoin prices spiked.
Because of this, do not be afraid. If the ETF is approved, the market sentiment will become better and, even if it is not, recovery will happen sometime and, when it does, the market will have a considerably better infrastructure than it currently has.