Predictions have been made as to why cryptocurrencies dropped so low yesterday.
Prior to December 22, ICOs were breaking records and overcoming barriers that people could have never imagined at the start of the year.
According to data from OnChainFX all of the top 20 crypto currencies have hit all-time highs in the past four days.
But what goes us up, must come down. Bitcoin fell as low as $12.5k yesterday, amounting to over 20% decrease in the entire ICO market cap.
What caused it? There’s a few possibilities.
Jesse Damiani writes in Forbes that Christmas spending might have even played a part, saying:
It might seem comical when you first hear it, but with major holidays like Christmas, Hanukkah, Kwanzaa, and New Year’s planted right in the same month stretch—the end of the year is a notoriously bad time for savings accounts and investments, as many seek to withdraw yearly gains…
The end of the year marks the time when these investors would be most likely to convert their winnings to cash, and yesterday—conveniently just a few days before Christmas—might have been the day that experienced the greatest impact of this behavior.
Speaking about possible hackings and regulation, he added:
Earlier this month the SEC halted PlexCoin on charges of being an ICO scam, and this week it reportedly suspended trading in The Crypto Company over “concerns regarding the accuracy and adequacy of information” and stock manipulation. Meanwhile, Youbit, the popular South Korean exchange, announced its closure on Dec. 20 after being hacked (purportedly by North Korea), losing 17 percent of all assets.
As an added note, the ‘insane’ energy costs associated with Bitcoin mining continue to garner negative press as we move into the new year.
There is a chance that the general concern created in these developments has scared off potential investors and even caused existing participants to cut their losses.
Jesse also warned that a ‘crypto winter’ could be on the way.
The argument against this being a sign of crypto winter is that we’ve seen this degree of volatility in Bitcoin all throughout 2017 (and even prior). The difference now is that the sheer volume of players is a full exponent greater than it’s ever been—and many new participants have no experience navigating these types of markets, making them more sensitive to the down moments.
If we are entering the crypto winter, the past eight years of Bitcoin has revealed two things: 1) that Bitcoin always bounces back—and with it, a whole roster of cryptocurrencies (with inevitable casualties along the way), and 2) the demand for decentralized currency and blockchain technology is here to stay. Some might urge you to cut your losses now before the supposed winter blusters in harder. Others might say it’s just another hump in the road.
Do you have any theories of your own?