Op-ed why the bitcoin bubble burst is good for crypto – bitcoin insight

Even the most ardent crypto evangelist must admit that bitcoin appears to have been the worst investment of 2018, at least in pure dollar terms. The cryptocurrency has lost almost 80 percent of its market capitalization since it established an all-time high at around $327.15 billion. The adoption rate and volume have dropped likewise. Organizations that were planning to launch their bitcoin-based services have delayed their projects or scrapped them entirely. As any seasoned trader would say, the bitcoin bubble is bursting — or has burst already. The Anatomy of a Bitcoin Bubble In pure dollar terms, the bitcoin price is on the downside of its largest-ever price bubble.

The surprising upturns and downturns of a financial market can confuse onlookers. It eventually is a game of passing sentiments – from one investor to another. If one sells, other buys. But in the event of a crash, when one sells, nobody wants to buy. It starts with a few investors dumping assets at high, then spirals outward. Other investors flock the selling action purely because of panic and price starts plummeting faster. It attracts more selling pressure, leading to fission.

What 2018 brought to the bitcoin market was a lot or sellers against limited buyers. In 2017, it was the opposite – more buyers against fewer sellers. The diverse performance of both the financial years, in successive order, shows that investors were purchasing bitcoin on either the speculation of a bull run or to acquire other digital assets that also promised higher returns in less time.

ICOs, as they are called, were a phenomenon back in 2017. Ethereum-enabled blockchain projects, claiming to be the next Apple or Microsoft, raised funds after selling their unregistered, unregulated digital assets for top cryptocurrencies like bitcoin. The buy orders, therefore, started piling up, leading the bitcoin’s value to its all-time high at $20,000.

Digital Currency Group founder Barry Silbert supported the theory during an interview to CNBC. Galaxy Digital Holdings’ chief Mike Novogratz also told Bloomberg that ICO market is pretty much dead after “a lot of hype,” and that bitcoin will emerge out of its depression down the road. Bitcoin: the Long Road to Recovery On the logarithmic charts, bitcoin’s decline looks less concerning.

The dot-com bubble, for instance, comes close to resembling the crypto bubble. In the late 1990s, the introduction of the internet prompted a massive wave of speculation in dot-com companies. The Nasdaq Composite Index, which listed most of these tech startups, jumped from under 500 at the beginning of the 90s to establish highs over 5,000 in March 2000. The index plunged by 80 percent after that but recovered back by 2015 to set new highs.

The market is already preparing a welcome for bitcoin as it transits from retail to more serious institutions in 2019. Bakkt, a bitcoin futures platform backed by Intercontinental Exchange, will be launched at the end of January. The US Securities and Exchange Commission (SEC) would also provide its final take on the VanEck’s bitcoin ETF which, if approved, could open the gates of multi-billion dollars worth of investments into the bitcoin space. Bitcoin Dominance Rising Bitcoin’s market share climbed, even as its price declined.

Cypherpunk Jameson Lopp, in his latest report, also found that Bitcoin is growing on almost the metrics other than economics. In 2018, the crypto market led by the digital currency raised $3.12 billion in investment, four times more than in 2017; the academic and user interest in it grew twofold; the coin’s development repository saw more commits than any other crypto project; and its Lightning Network solution gained momentum all across the community.

With strong fundamentals behind it, bitcoin would most likely correct, but it would be more mature than the earlier corrections. Rich investors, who are already hit by a US stock market crash, would be more inclined to move their value towards safe havens like the dollar, the yen, and gold. Bitcoin, being a relatively new phenomenon, could catch their eyes once its infrastructure will be ready to handle more volume and liquidity.