The prices of the top 20 cryptocurrencies based on market capitalization have been on a free fall this year. Market leader Bitcoin is currently changing hands below $6,500 after hitting an all-time high of $19,783 on December 17, 2018.
Ethereum, the second most popular and largest digital currency, is also down 74% year to date and has suffered a slump of 90% since reaching $1,417 in January. Litecoin, Ripple, and Ether have also tumbled by huge numbers, according to Bloomberg composite pricing.
Bloomberg says that the sharp drop in altcoin prices experienced in 2018 is even worse compared to the dot-com bubble burst that occurred 18 years ago. Back then, the value of the U.S. equity markets rose rapidly, driven by huge investments in tech-based companies over hopes that they would profitable.
Some of these companies had not even reported a profit or revenue by the time of going public, but their stocks ended up tripling or quadrupling in one day. The same case appears to be affecting cryptocurrencies. In 2017, the currencies rose to very high levels, triggered by speculation that they would revolutionize many industries.
However, that rise has drastically gone down and some people no longer consider them as the gold currencies of the tech world. Industry analysts believe that multiple reasons, such as government regulation, market manipulation, Wall Street effect, and media influence are to blame for the 2018 Crypto Crash.
Ethereum and Bitcoin prices tend to change drastically anytime government statements hint at regulating cryptocurrencies. The impact of such statements is normally felt even if they are not related to the currencies directly. A good example is when Ethereum shed close to a third of its value and Bitcoin fell by more than a quarter in January after the Chinese government tightened its strings on altcoins.
Market manipulation is another major factor that has dramatically affected the prices of both major and lesser known virtual currencies. For example, some traders make extreme profits by buying huge chunks of cryptos in the market to make prices appear as if they are going up before releasing them the market again. Prices are also affected by huge extreme mining attacks that normally force most traders to sell their altcoins in order to avoid loses.
Each time there are restrictions on the use of virtual currencies, their prices are often affected. Some governments are even calling for the elimination of the anonymity nature of crypto transactions as one of the best supervision mechanism. If this comes to pass, prices could certainly fall to unimaginable levels.
Some traders have also pointed their concern over the crypto network saying that they that could end up losing their money. Cryptos are different from conventional currencies in that they are only of value when exchanged with other currencies, such as the dollar and euro. As such, cryptos bubble would burst if most traders stopped accepting bitcoins.
Despite the massive plunge this year, some cryptocurrency enthusiasts are still optimistic that the prices will bounce in the near future.
