Total crypto market cap plummeted to less than $300 billion from over $840 billion within a month. Too many speculations going on and people are really uncertain about the future of cryptocurrencies. One correction after another but what is actually going on…?
Concerns are,
- Has the bubble really burst now?
- Is there any chance of cryptocurrencies recovering?
- If the market ever going to recover, when is it going to happen so?
To understand what is happening with the crypto market now, it is essential to revisit the history. Let’s go back to 2013.
On Oct 4th 2013, the total capitalization of the market was $1.7bn. After around 50 days, this amount surged to $15.7bn. That’s 823% increase in 50 days right?
LET'S NOW COMPARE IT TO THE 2017 SURGE
On 17th Nov, total crypto market capitalization was around $227bn. What happened after 50 days? It reached to around $830bn. That’s again 265% increase, right?
DECLINE OF THE CRYPTO MARKET
So, let’s get to the basic. The faster it climbs, the faster it drops.
Then, what happened to the crypto market following the rapid surge in 2013?
Look at that! From $15.7 billion to $6.8 billion in 14 days? That’s bloody 57% decrease in two weeks. Isn’t that Ridiculous?!
Do you now feel the pain of those who invested during the peak and ended up losing half of their investment in a couple of weeks? How does it compare to your loss now?
LET'S NOW LOOK AT THE 2018 DECREASE
Oh! It looks familiar now.
Following the 2017/18 surge, the total market capitalization declined to around $300 billion from $830 billion. That’s a massive 64% decline in 30 days.
Panicking, massive sell offs, and FUDs? Well, it’s understandable!
WHAT'S NEXT NOW?
To understand what will happen in coming days, let’s go back to 2013 again and see what had happened…
HOLLY MOLLY!!!!! Look at that!!
It took 2 bloody full years to recover to the pre-crash stage.
That’s a lot of pessimism to deal with. I am so sorry, but this is the fact.
It’s extremely hard to gain back people’s confidence on something once they are burnt with it. It took 2 years to recover when market had barely reached $15 billion. Now it has reached over $800 billion. Hence, road ahead to the recovery isn’t going to be easy.
ADDED OBSTACLES
Crypto market isn’t the same anymore. Added government control, crypto bans, banks trying their best to stop crypto, FUDs and on and on……you all are aware of it.
IT'S NOT ALL PESSIMISM, TRUST ME!
Things have changed for better since 2013 too. In 2013, most people solely invested to maximise their wealth. Now, many of them are liberated and truly believe block chain can transform their ways of doing things. So, what do we have now – more stronger hands to hold for a long term!
WILL IT DIP FURTHER?
No one on earth knows!
Let’s analyse it with a famous theory - Wall St. Cheat Sheet
This is a cycle. It will re-bounce like it did. But when? Nobody knows. It could be days, or months or even years.
Remember, that’s only until block chain technology is considered superior to others. There are new technological innovations appearing each day.
BLOCK CHAIN SUPERIORITY?
Are there any chances of technologies superior than block-chain being developed? Of course, many chances!
What if a new and better technology appears and gets adopted by some credible institutions or governments? RIP block-chain and the crypto market!
DOTCOM BUBBLE AND THE CRYPTO
We can see people comparing crypto to dotcom bubble. So, are there any similarities?
Let’s now look at the dotcom crash.
A very familiar chart, right?
Following are the arguments generally raised by the crypto enthusiasts.
a) Technology behind block-chain
b) Market cap of dotcom was $5 trillion before the crash, crypto only reached $830 billion.
Well, I am sorry again but I don’t have a great news available for you again.
In regard to the technology, dotcom was a technological innovation then, just like block chain now.
Regarding the market cap, dotcom was not cracked down by governments as much. Why? Rich and wealthy invested on dotcom and governments love rich and wealthy. Now, it’s the common public that have invested on the block chain.
HAS THE CRYPTO MARKET REALLY CRASHED YET?
Well it all depends how you define it. To me, it is just a healthy major correction.
I drew a small chart on the last 1 year’s crypto market’s development.
As you can see, the market saw a seemingly unsustainable growth in a short period. It had to come down to grow further. It just looks like a healthy correction to me. If the market drops below $150bn, it’s when I will call it a crash. People those invested a year ago are still on over 1000% gain. So how is it a crash?
BUYING YOUR LAMBO WITH CRYPTO?
If you haven’t bought yet, it’s extremely hard but not impossible.
WHY?
We already analysed 2013 meltdown and it took a complete 2 years to recover. Now with added obstacles and uncertainties, it will be even harder. In addition, the amount of $ needs to be added back to recover is significantly higher this time, which makes things far more difficult.
IF YOU ARE A SMART INVESTOR, YOU CAN STILL MAKE IT
During the recovery phase between 2013-2016, traders didn’t just bake potatoes. Some still made a lot of money. People those invested in good cryptos still saw a significant growth.
HOW WILL THE MARKET LOOK LIKE IN 2 YEARS?
I believe this crash was essential to wake people up and it has done its job to the core. People now will think twice before investing in an untested crypto. In this way, good cryptos will succeed and bad ones will disappear. Some will make it to the top, many will just fade away. ICOs will struggle to reach their soft cap unless they are led by really credible people.
SO, WHAT'S THE BEST WAY FORWARD?
a) Don’t cash out unless if you really really need to
Just imagine if you are an investor that got burnt by 2013 crash and sold all crypto on loss and never returned? I am sure you are living with a big -time regret.
I hate to live with regrets and I am sure so do you. Therefore, never cash out on loss unless you are getting evacuated for not being able to pay your mortgage.
No-one knows what will happen in the future. The market is so speculative and all it takes is few positive news for billions of $ to flood back in.
b) Don’t FOMO – Always do extensive research before investing.
Always do your research and never run after hype and people’s recommendations. Not even your favourite YouTubeer, not even me.
Investing in a crypto essentially means you are giving an unknown party your money hoping they will do something profitable. What if they don’t? Your money is gone! Hence, the project and people you are investing must look promising to you.
When people are already talking about a project, it means it already hyped and you are near top. It’s not the right time to invest. Let the hype settle down and the price fall. Meantime you research more about the crypto and invest once hype is over if you are really convinced.
c) Always stay updated about the progress of the projects you’ve invested in.
Follow them on twitter, check their development works in github, and communicate with them on telegram. In this way, you can find the progress about the project. As soon as it looks unsatisfactory to you, pull off and put your money in a better place. Trading isn’t gambling!
d) Only invest in few projects (up to 10) that you really believe in
Don’t spread your money everywhere. It will be hard to keep track of everything and will be really time consuming. Again, as aforementioned, only some will make it to the top so you should be able to detect those few to make good returns.
e) Do not give up your job to day-trade
Future of the crypto market is uncertain and no-one knows what is going to happen in the future. So, treat it as a passive source of income.
f) Do not treat your crypto portfolio as your bank balance
The first rule for investing in crypto was ‘do not invest more than what you can afford to lose’. Anything can happen to your balance. So, invest and forget about it.
g) No to pumps and dumps
Pumps and dumps are methods of ripping off your fellow investors by burning them. This is very unethical. You will get burnt badly one day trying to burn others. So, say no to MacAfee tweets!
h) Accumulate during market dips – only when you have spare cash
If you have funds that you are willing to invest in crypto, always wait for a reasonable dip. Never FOMO. Anything that goes up, it will eventually come down.
ABOUT ME:
I am a PhD researcher as well as a crypto enthusiast. I manage a Facebook group – ‘Crypto Traders’. Let’s get engaged:
https://www.facebook.com/groups/cryptotradersglobal/?ref=bookmarks
Please connect with me and let’s communicate.
LinkedIn: https://www.linkedin.com/in/dipendra-bagale-mba-pgd-9968b899
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