The year 2018 has been a spectacular year for the Cryptocurrencies both in terms of scaling heights and falling to depths. It has been a roller coaster ride till now, which I guess no-one predicted. The last few months have been even more frenzied and I think we are in for a Grand Finale as we approach the end of the 2018.
The market cap of the cryptocurrencies at the start of the year 2018 i.e. 1st Jan 2018 was $610,112,000,000 and at its peak on 18th Jan 2018, the market cap was $813,871,000,000 and the lowest ebb YTD was on 15th August 2018, when the market cap dropped to $191,629, 520, 491. So, over the course of 2018 till date the market cap grew by 33% in a span of 18 days and then had a whopping nosedive loss of 325% within the next 8 months. As we stand today the market cap seems to be oscillating in the range of $220 — $190 Billion, with wide fluctuations and frenzied activity and the hope and hype that a repeat of 2017-year end is just around the corner.
Reasons Why ….
- Continuous rejection of the Crypto & Bitcoin ETF fund application by SEC
- Winklevoss Twins Bitcoin ETF rejected twice
- Nine ETFs proposed by ProShares, GraniteShares, Direxion ETF rejected
This rejection by SEC has taken its toll and by far has had the maximum impact on the crypto markets. However, it is important to note that SEC did leave a lifeline for the crypto community by saying that the rejection was due to Applicants not meeting requirements rather than rejection of the cryptocurrencies itself.
- Adoption Vs Market Surge not proportional
We still do not have high volume actual use cases of real life transactions done on cryptos. While there is a lot of trading volume, but real applications are missing. In fact, due to the volatility of the cryptos the trading interest is high but that defeats the ability of cryptos to be used for real- life transactions. Will you like to sell something in exchange of cryptos and realize that the next second the value of the cryptos has gone down to ZERO.
A turning point will be when we start seeing transaction volumes climb like the trade volumes. Once that happens the Frenzy is likely to reduce.
- Regulatory crackdown was relentless in 2018
- India Banned Cryptos in 2018 and had a huge impact as it was one of the top crypto trading markets in the world
- Pakistan also followed with the ban in 2018
- China announced a crackdown on Crypto Exchanges earlier this year
- Indonesia banned it just at the start of the year 2018
- Japan banned Anonymous Cryptos — namely Moenro, Augur & Zcash
- South Korea briefly bans crypto trading before making a U-Turn.
These recent bans have added misery to the crypto markets and is one of the biggest causes of the fluctuations we have seen in the year till date.
- Lack of real world use cases
While a lot is happening in this space and we have seen almost 2000 ICOs that have claimed to change the way we live, eat, shop and transact but despite all that we have not seen retail transactions growing on cryptos. While Ripple was tipped to take over the remittance business across the world and deliver huge amount of transactions, it has largely been rescinded to a Test Story. Till we see massive adoption or see clear signs of adoption, the state of affairs will largely remain unchanged.
- Frequent breakdowns and Fraud and Theft issues have plagues cryptos in 2018
Over $1.1 Billion was stolen in the first half of the year 2018 and it seems to be quite easy to steal and vanish with the cryptos as per a CNBC report. The United States was the most vulnerable country, with 24 crypto-related attacks. China was next with 10, and the U.K. came in third with eight.
- A total of $1.1 Billion Stolen
- Two South Korean Exchanges robbed of a total of $71.6 million
- South American Bank Banco De Chile lost $10 million
- Ransomware using cryptos for ransom payments, like WannaCry.
- CoinCheck lost $538 million in early Jan 2018.
- Centratech, PinCoin, HoweyCoins OneCoin and the Smominru Miner are some high profile scams that depleted the reputation of cryptos.
- Rapid ICOs with zero governance has further allowed fly by night operators to take advantage of unsuspecting retail investors. Anonymity has its charms and chasms. It is the small investor who has paid dearly at the hands of some people who took advantage of the hype and get rich overnight frenzy of the crypto markets. This has really pushed out the ordinary investors and today the trading is largely left in the hands of few very large traders.
The absence of governance, tractability and traceability, the very nature of the crypto i.e. its anonymity and encryptability has taken a negative turn and is the cause of the deprecation of the market cap.
- ICO liquidations
Another big reason for the loss of fortunes in terms oCrypto frenzyf market cap and the high volatility in 2018, especially post may 2018 is the liquidation of the ICOs which raked in huge amount of investor money. Since most of the ICOs were in ETH and BTC, the liquidation has further put selling pressure thereby causing the downward trend in the market.
- Pump and Dump operators
It is believed that there are a handful of operators who completely understand the market and the rest of the players, including some large investors and the mid and small retail investors are just being fooled around with. If you are a member of the Telegram crypto and trading communities, then you must be aware of the buy and sell signals being passed around. These are largely Pump & Dump schemes that generate profit for a handful and losses for millions.
- HODL, FUD, FOMO, BTFD, Moon, Week Hands, — are playing havoc
- HODL — Hold On for Dear Life. Once someone buys a coin and does not or cannot sell it is called HODLer of the coin.
- FOMO — Fear of Missing Out. A feeling that if you do not do something right away you will have massive loss and miss out on once in a lifetime money making opportunity.
- FUD — Fear, Uncertainty and Doubt’. This is what the crypto market plays on.
- BTFD — Buy The Fucking Dip — Buy when the market dips and the market will dip even more after that.
- Moon — A slang that means a bull run for a coin that is heading to the moon.
- Week Hands — Investors who are not patient and take a loss and sell in duress
Nerd is the new hype and these nerdy acronyms further make the general public feel as if they are missing out on the new world order. No one understands these terms and BTW there are just there to nerdify the cryptos.
But there is light at the end of the tunnel. Cryptos especially the Top-20 have shown a lot of resilience under these trying circumstances and despite the huge pressure from world over, they continue to maintain interest and the promise of a new world order. So HAGN-ON (which means hang on till you reach there.)
