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Bitcoin has recently lost a lot of its value. However, the latest crash has been of over 12% of its value in just 24 hours. Bitcoin now trades at around $5,673, a level at which it was at in October 2017. However later that year, i.e., in December, prices of Bitcoin were at an all-time high of $20,000. Does the latest crash in Bitcoin value signal the final death of cryptocurrencies or should we expect a revival soon?
It is no surprise that the entire cryptocurrency market follows the trend set by Bitcoin. All the major currencies, i.e., those in the top 20 seem to have lost between 9% and 16% of their values over just a single day. The only exception is perhaps Tether which was directly pegged to the US Dollar. BTC was traded at present price levels just last year in October 2017.
We have seen the entire cryptocurrency market contract considerably at a rapid pace compared to Bitcoin which seems to be doing comparatively well. BTC continues to be the most popular cryptocurrency occupying 53% of the cryptocurrency market. Bitcoin cash occupies 4%, and Ethereum occupies just 10%.
According to Brian Kelly, the founder, and CEO of BKCM, a lot of the crash has to do with Bitcoin Cash. Calling it the crypto civil war would be a fair label owing to the announcement of BCH hard fork which as caused the market to go into chaos mode. Also behind the cryptocurrency market is technology or upgrades in technology which are behind some of the most noticed movements in price.
Kelly says that everyone just started selling which suddenly triggered the stops. Everybody is in concern mode, and that’s what has resulted in the whole market going into a tailspin.
However, Kelly, as well as a few others, strongly believe that the downturn is temporary and people should look at it as an opportunity. On the other hand, Meltem Demirors who is the Chief Strategy Officer at CoinShares has warned all potential investors in the crypto space that many if not most of the assets are not frequently traded and so they have a small trading volume. Thus, investors need to approach with a great deal of careful assessment.
If Bitcoin continues to depreciate it can end up providing a tonne of short-selling opportunities for investors. That said the cryptocurrency market is volatile and any forecasts shouldn’t be taken as the word of God. Crypto and all assets under this umbrella are very hard if not impossible to predict.
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