March is almost over, and the cryptocurrency market capitalization is reaching a new low for this year. The total market cap today is just $267 Billion, a major decline from the $813 Billion one that we had on January 7th. This reminds me of Vitalik’s famous tweet:
So total cryptocoin market cap just hit $0.5T today. But have we *earned* it?
— Vitalik "Not giving away ETH" Buterin (@VitalikButerin) December 13, 2017
No, apparently, we didn’t. The market is on a continuous downtrend that will not probably stop until we understand the possible reasons of the decline:
1. The lack of positive news
Since the beginning of the year, it was clear that websites like CNBC, Bloomberg or others will go against Bitcoin. And the fact is that they hit the cryptocurrency market with all they had. A decent amount of people tend to believe anything that these websites says, including fake or misleading news.
Don’t expect the media to have a positive opinion about Bitcoin or cryptocurrency in general. They don’t. Don’t listed what CNBC, Bloomberg or any similar publication have to say. If there weren’t money in Bitcoin, probably, they would have never talked about it. All they’re doing is for their own benefit. They don’t understand the technology behind it and they don’t need to. The audience that they’re targeting are the common people unaware by what a cryptocurrency is or how it works.
They’re targeting sheep. The people that believe what they’re posting without researching in more places. And with this, they hurt the cryptocurrency market. If you invested in Bitcoin in December because CNBC told you it`s the hottest investment right now – You wouldn’t trust Bitcoin anymore. There are a large number of people that are calling the cryptocurrency markets a bubble just because they suffered a loss.
They don’t want to educate people, they want them to keep trading stocks and stay away from cryptocurrencies. Or worse, make people invest in Bitcoin right before a massive drop.
Do your own research properly and decide if the cryptocurrency industry is worth investing in or not.
2. The December investor wave
December was probably the most profitable month for cryptocurrency traders worldwide. As Bitcoin’s growth in 2017 was the hottest topic, any Christmas dinner table had a discussion about it. Everyone wanted to get a part of the cryptocurrency that had a 1000% growth in only one year.
Most of them probably did invest. But they invested in a manipulated market, one that was close to reach the all-time high. Some smart people sold at the right time while others either sold on a loss or are HODLing even now.
And this was the December wave. A large amount of people investing in something they haven’t understood properly hoping for massive gains. These investors were not accustomed with the cryptocurrency market and were probably scared away by the first -8% they’ve seen.
3. The Cartel, Bitcoin Futures and mass manipulation
If you didn’t understand the heading, please read Super Crypto’s article on Medium. Basically, he explained that a group of people are manipulating the cryptocurrency market by keeping the bitcoin price down. How do you profit by suppressing the price of an asset? Futures Contracts.
Is there a Cartel who’s keeping the Bitcoin price down? Probably. No one can tell you for sure. One thing is certain however, Bitcoin price is being manipulated. Not since this year, not since CBOE started, but from a long time ago. It took Bitcoin 8 months to reach from $1,000 to $10,000 and another 20 days to reach $19,000. Does this look like a natural growth to you? Of course not.
And what comes, we all know. A 70% natural-correction, right? No, it was a price-suppression managed with FUD news. A few months before, CME Group’s Leo Melamed declared: We’ll ‘Tame’ Bitcoin. And they did, for now.
4. The ICO issue
There are too many ICOs. Each day new ICOs appear that want to ‘disrupt an industry of trillions of dollars’. I’ve heard this over and over again and I’m sick of it. 50% of ICOs are unnecessary. 45% of ICOs are a scam.
Nowadays, everyone wants to make an ICO – but for the wrong reasons. Create an ICO if you have a project or an idea that you believe it will help an industry, not because you want to get rich fast. Before that, ask yourself if you need an ICO. NANO is a well-known cryptocurrency that started as a faucet. The NANO had a price of under $0.01 when it was live on CoinMarketCap. But, with a solid team of developers and an active community – they managed to reach an all-time high of $34.43.
They got from under $0.01 to $34.43 without making an ICO. What’s your excuse? You want to buy your dream mansion? Don’t create an ICO for that. TheMerkle declared that 81% of the latest ICOs are or will turn into a scam. In my opinion, the percentage is too low. I consider 95% of the ICOs are a scam. I have a list with questions that tells me if an ICO is a scam in less than 5 minutes:
- Is there a similar cryptocurrency on the market already? Are they trying to compete with it?
- Are they trying to disrupt a multi-billion-dollar industry with their idea? Do they mention that by investing in them you will have a great ROI?
- Has the CEO worked before in that industry? How about the CFO,CMO,etc.? Where did they worked before? Was that company a scam?
These questions helped me avoid scam ICOs. Hopefully it would help you too. One thing is certain about ICOs:
5. Airdrops, Hard Forks, Signals Telegram Groups, etc.
All of them are designed to make the same thing: increase the value of a cryptocurrency and bring profit to a certain amount of people.
This year alone were at least 2 Bitcoin forks – until now. Bitcoin Private was the most recent one, expected to have a price of $100+. It failed to do that as it wasn’t listed on any big exchange. Any investor that bought ZCL in the last day in order to get BTCP had a massive surprise. After the snapshot was done, the ZCL value dropped from $86 to $15 in less than 5 minutes.
Callisto airdrop was probably the most known airdrop for this year. Any ETC owner would get 1 CLO for each ETC in that airdrop. People expected this airdrop to bring a massive increase in value for ETC – but this never happened as ETC barely passed $40.
There are hundreds of paid crypto signals groups. All doing the same thing : convincing you to invest in a cryptocurrency that they pre-bought it so they could sell it to you at a higher price. And you’re also paying them for that. How awesome is this?
All these hurt the cryptocurrency markets. Instead of investing in a cryptocurrency that you believe it have a potential – you’re investing in x cryptocurrency because there’s an airdrop/hard fork soon. You have to let change your mindset and invest in quality project, not ones that offer airdrops.
6. Lastly, scammers & hackers.
Scammers are everywhere, even in crypto. A common technique applied is to message the person on telegram asking for funds, such as its portrayed here. Another used technique was to create a twitter profile similar to a worldwide celebrity and to make a giveaway of X ETH for the people that deposit 0.X ETH to a given address. Of course, no one won there, except the scammer.
Scammers are everywhere in this industry – from twitter to telegram and beyond. If someone asks you to send funds before – there’s a 99% chance of being scammed. This is not a major issue in crypto though, as the majority of people don’t fall for this. But they’re getting smarter day by day, involving FBI in cryptocurrency.
Recently, CoinCheck was hacked by $500 million in cryptocurrency, more info about this here. Binance had issues with hackers too. The hackers used a phishing website to gain access on multiple accounts so they can pump the VIA price.
And we’ve just started the year. Who knows which exchange will get hacked this year? One thing is certain, exchanges need to re-evaluate their security or to hire companies that can assure them a decent level of security.
The Cryptocurrency Market has entered on the ‘Survival of the fittest’ mode. The investors that remained until now are the ones that read the whitepaper of the project they’re supporting, they’ve secured their funds as good as they can, and they stopped caring about the price so much.
The cryptocurrency market is going trough tough times. Mass-media is throwing mud at it, Facebook, Twitter & Google stopped the cryptocurrency related ads – it seems like its time for a change.
Stop caring so much about the price and start thinking about how you can help the cryptocurrency industry. Educate yourself so you can educate others. Give a bit of your time to help others – there are plenty of questions about crypto everywhere and we don’t have enough ‘experts’.
Improving the community is far more important than improving the price.
This is a guest post, the author wanted to keep his identity anonymous. This article represents solely the author’s opinion and not ours, the team from usethebitcoin.com.