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Why Does The Crypto Market Keep Going Down?

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Back in Q4 of 2017, the crypto market suddenly received a lot of interest due to several reasons. They gained more exposure, which led to an increase in value, which in turn brought even more exposure. Simultaneously, ICOs became popular as well, and most investors started buying cryptocurrencies such as Bitcoin and Ethereum in order to exchange them for different new tokens.

In other words, Bitcoin and Ethereum themselves were not the coins people wanted to own. Many were actually interested in a number of new coins which could only be obtained via BTC and ETH. However, those who did want to own BTC and ETH — did not want to sell. This created a demand for these two coins, and their value started growing.

Meanwhile, the companies that held ICOs became whales, and they started unloading their coins in December 2017 and January 2018. After the new year started, startups needed to exchange their coins for traditional currencies in order to be able to pay their developers and help their own companies grow further.

The oversale led to the crash of the market, which resulted in a near-total halt of ICOs in 2018. Due to falling prices of crypto, people did not want to invest in new coins, so startups stopped offering them. Those who did offer new coins started accepting fiat currencies for them, and Bitcoin and Ethereum were no longer the only way of obtaining new tokens. As a result, their prices dropped even further,

The market is still dominated by Bitcoin, and this single coin is capable of affecting nearly every other cryptocurrency, including Ethereum. All of their prices go up and down in a perfect correlation. The market should not act this way, but it has no choice due to the lack of regulations and centralization which would keep things in check. However, things are not one-sided as they appear, and as BTC behavior can alter the price of other tokens, the opposite is also true.

The shift in ICO trend

Then, in 2018, something else started happening. Investors started realizing that most ICOs did not have tech experts working on them and that most of these new tokens are not something they wish to invest into. And, while BTC and ETH price increase allowed other coins to grow in value due to extreme price correlation, the drop is affecting the entire market in exactly the same way. In other words, the coins are not as independent as investors would want them to be, and they all grow and drop at the same time.

This is a bad situation even for the established coins, but it is much worse for weak startups that are just starting to appear. However, this can also serve as a filter that will take away weak coins, with only the best ones being able to survive. With less money for random investments, not any ICO can survive anymore, and investors are not willing to gamble by throwing cash at every new ICO as they did in late 2017.

Another thing that has changed is the amount of involvement from institutional investors. While still not ready to go all in, institutions are developing more and more interest in crypto, and they are now believed to be investing more than retail investors. Institutions can also bring a lot more money to the crypto market, but they will not invest in any project. Due to the fact that these are professional investors, they will seek out only the best investments.

While they will want to have their investment portfolios as diversified as possible, they will also aim to have the best risk management. This does not only include tokens but equity as well. All investments will come only after proper research is done, and institutions can ensure that the project is worth investing in. Such way of conducting things will also see a return to traditional market valuation.

As a result, it is expected that startups in 2019 and the following years will be better on average than the ones launched in 2017, which will influence the market’s stability in a positive way. Furthermore, the population of management teams is expected to evolve due to the fact that professional developers are now entering the blockchain industry.

Rooting out bad projects in the crypto market

When it comes to old cryptocurrencies. Bitcoin itself has proved on numerous occasions that it is resilient enough to survive even the harshest conditions. It has already been through numerous surges and crashes, not to mention events such as Mt. Gox hack. In the long term, Bitcoin will likely continue to rise, and after the market gets cleared of weak projects and scams, it will become more robust.

In other words, bad projects will likely run out of money and be forced to shut down due to their coins being worthless, while the crypto itself will survive for long enough to see prosperous times once more. The process can only be completed through weakening the market, which is the situation that is happening right now.

After the correction, a few killer startups are expected to emerge, and these will likely be the one that will lead crypto towards real mass adoption. As a direct result of bringing more crypto users and investors to the market, the value will grow, and surviving coins will likely reach new all-time highs. The token adoption will likely start through a video game sensation, perhaps a crypto-equivalent to Angry Birds. Other projects that will start implementing crypto in new, imaginative ways will appear as well, and the process will continue.

And, as blockchain itself continues to develop and bring decentralization, transparency, and data security into the business world, blockchain adoption itself will follow as well. Considering the vast use cases of the blockchain, and its potential to eliminate scams and data manipulation, this might happen relatively soon, with more and more industries switching to this technology.

All in all, many experts see the current price decline — and the entire year of 2018 — as an experiment with crypto. It had its good sides, such as showing the limits, as well as potentials, of this technology, and also raising awareness of it. After the initial hype dies down, this technology will finally be able to develop properly, with major players joining in.

As a result, the next couple of years, and maybe even decades, are expected to bring prosperity to the economy and business world, but to reach it, it is necessary to first suffer the constant bear attacks and survive massive losses.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Altcoins

Cryptocurrency Collateralized Debt Positions Are Growing in Popularity

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While Bitcoin (BTC) continues to hover around the magical 10,000 price level, altcoins continue to fight an uphill battle.  Simply put, hopes of a future bull run continue to diminish as Bitcoin maintains its dominance.  One school of thought is that a few altcoins will survive and flourish, but which ones are anyone’s guess.  That being said, it’s hard to go wrong picking against the top coins like Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and EOS.  These projects have managed to find a foothold in the market and have a better chance than most of staying there.  While traders wait for their positions to increase in value, one opportunity that may be worth looking at is initiating a collateralized debt position.

What is a Cryptocurrency CDP?

In traditional terms, a CDP is essentially putting up collateral in order to receive a loan against the deposited amount.  There are several examples of this in our day to day lives.  Auto title loans from large companies like TitleMax are extremely popular with consumers.  Consumers are essentially able to use their car as collateral in exchange for a cash payment which can then be used for whatever needs the consumer has.  The consumer can continue using their car as long as debt payments are made.

The same concept applies to cryptocurrency CDPs.  Consumers are able to put up crypto tokens, such as…

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Altcoins

Hodium Presents a Compelling Opportunity for Outsized Investment Returns

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I’m sure all of us remember the cryptocurrency glory days of 2017 and early 2018.  It was one of the biggest bull runs in history and created incredibly wealth for quite a few early entrants.  Unfortunately, for most of us, those gains have most likely been wiped out during the altcoin apocalypse.  The truth is that traders probably thought a bit too highly of their trading abilities when the reality was that anyone could have thrown a dart at a board and ended up making money.

As markets mature (and the crypto market is definitely maturing) it becomes more and more difficult to generate alpha.  In that regard, it’s similar to traditional financial markets.  I can remember trading during my high school days.  It was the late 90s and right in the middle of the dot.com boom.  Eventually, however, the euphoria fades away and reality hits hard.  Now, it’s become rather difficult to actually trade profitably which has given way to the rise of hedge funds.

Hedge funds are investment funds that pool capital from accredited and/or institutional investors and invest in a variety of assets, often with extremely complex portfolio-construction and risk management techniques.  The professionals employed by hedge funds are the best of the best and have spent years honing their craft.  That is why they’re able to make the millions of dollars that they normally…

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Altcoins

KaratGold Proves Its Business Model By Providing Official Documents

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There has been a lot of renewed enthusiasm in the cryptocurrency market thanks mainly to Bitcoin’s strong move about 10,000.  Although Bitcoin continues to show its dominance, the altcoin market has yet to benefit from that rally.  A few of the largest altcoins remain popular but the rest of the market continues to lag behind.  In 2018, there was a lot of talk regarding a possible altcoin apocalypse where only the strong would survive.  That prediction appears to be playing out as expected.  Going forward, only the best projects that have a real world need will survive.  Crypto traders will have to spend a lot of their time doing proper research in order to find the best opportunities, just like in all financial markets.  One promising project that appears to have the makings of a future winner is KaratGold Coin.

KaratGold Background

KaratGold Coin is a cryptocurrency developed by the reputable German company Karatbars International, which maintains a leading position in the market of small gold items and investments. The project is part of a larger ecosystem, which involves several blockchain solutions that can be used for transactions, communication, investing and other tasks. During the past few weeks, however, the KaratGold ecosystem has been a target of unsavory scam allegations.  

Karatbars International and GSB Gold Standard Banking Corporation…

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