While the past bitcoin crashes were mainly because of hacks or insolvable exchanges, the coming one has the potential for something way worse. The previous crashes left people with a bad performing asset that was still appreciated, real cryptocurrencies. The coming crash will leave most people hanging with an asset that's depreciated or even worthless. Of course you know I'm talking about tokens.
Now speculator Roger Ver claim the Bitcoin genesis block was the first cryptocurrency ICO. This is the most retarded thing I ever heard about cryptocurrencies (and I've heard a lot of bullshit). Investors expected these tokens from ICO's to increase in value fast. But this can only be because:
- the technology comes soon
- vitalik buterin says so
The token is useless, it can't do anything but seems promising for the future. So in the last 3 months, eleven companies replaced a billion dollars with their own token. The ICO's are held so the company can fund their development and drive Lamborghini's. Many investors didn't expect that these companies simply cash out the crypto and don't understand the token represents something that has yet to be delivered.
The market gets pushed down by these sell offs and the tokens start to perform bad. The hype is over, the demand doesn't grow so the trading volume decreases every day. The only real support for this token seems to be yourself and the other holders. Maybe the demand grows shortly (dev tweets: MAJOR updates coming soon!) but it doesn't raise the price enough to sell it with profit. It fills some sell orders but doesn't move the price at all. ICO's with no hard cap built in are exceptionally vulnerable to this and are the worse to invest in. There is no demand anymore once the ICO is over what's so hard about to understand? It's only downhill from there.
People that bought bitcoin for 10 cent, purchased something that already existed. Real working technology, a lot of competent developers put hours of work in it before it could actually be purchased. It was more than just a whitepaper, and a lot of discrepancies were already dealt with.
But during the downtrend token holders have to decide what they're going to do:
- Buy btc/eth with their tokens (pessimist)
- Buy more tokens with btc/eth, possibly buying more btc/eth to buy more tokens (optimist)
- Hold (possibly optimistic)
Token holders will be the first to suffer. Their asset have the weakest support and the options are spending more money or taking losses. Both actions benefit btc/eth and that's the only positive thing about it. Before Bitcoin and Ethereum go down there's still the support of weak token holders that abandon their investments.