By
Benjamin Njiri
April 23rd, 2024
Following so called “Bitcoin bubble” burst, this front-runner of the crypto market has experienced global slump in prices. Has this traders’ darling any chance to recover or is it all over?
By mid-June 2018, the price of Bitcoin hit a 4-month low. It has plunged precipitously from an all-time high of $20,000 + in December 2017. The market capitalization of the world’s premier cryptocurrency makes slightly more than $110 billion, with a circulating supply of 17,093,000 BTC, according to the CoinMarketCap.
The recent selloff of Bitcoin began on Sunday, June 10, having a domino effect on cryptocurrency markets. It is estimated that some $25 billion was wiped out from crypto markets after the selloff. Official data indicates that there are 1,628 cryptocurrencies operating in 11,261 markets, while the total market capitalization constitutes $275.771 billion with Bitcoin accounting for 40% of the market. This raises the big question on everyone’s mind: What tomorrow has in store for cryptocurrency?
The world’s top 5 cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), and EOS. Combined, these digital currencies, the value of which is vested in the blockchain technology that underpins it, comprise the lion’s share of the entire market.
Wilkins Finance is one of the leading experts in cryptocurrency trading, and their cryptocurrency definition is widely referenced in the literature. It reads:
“A cryptocurrency is a digital asset in the form of virtual money that is transferable between two or more parties over an electronic network. Cryptocurrencies can be used as a medium of exchange just as money is used or otherwise kept as an investment vehicle to be traded in a cryptocurrency CFD exchange.”
What Are Some of the Challenges Current Cryptocurrency Market Faces ?
One of the cryptocurrency exchanges in South Korea, Coinrail was recently hacked. This may have contributed to a loss of confidence in digital currency markets. Since Bitcoin is the front-runner in the market, it makes sense that other cryptocurrencies take their cue from Bitcoin’s volatility. It is estimated that some $40 million in virtual currency was lost, leading to a global slump in BTC prices.
Of course, what happens with Bitcoin has a ripple effect on markets in general. Bitcoin remains the short-term darling of cryptocurrency traders, despite a lack of upward momentum in recent weeks. In 2018, BTC has traded in the $7,500 – $10,000 range, although it is now trending short-term bearish due to a loss of confidence among speculators. The price of Bitcoin directly correlates with the trading volume that takes place. Analysts have noted the diminished trading volumes of Bitcoin in recent weeks and the concomitant weakness in prices.
If studies are correct, a degree of market manipulation was responsible for the bubble that formed in Bitcoin markets in 2017. If there is evidence of manipulation in Bitcoin markets, as indicated by a University of Texas study, this is a double negative for Bitcoin.
It has been noted that cryptocurrency markets are particularly susceptible to herd mentality. When the prices start rising, everybody starts buying, and when prices start dropping, everybody starts selling. If there is a correction in the near term, the price could rise above $7,000. We should also keep in view regulatory matters, which, especially lately, tend to have the upper hand when it comes to crypto market behavior.
Based on the current markets, the broad belief among crypto experts is that the price of Bitcoin will recover to $14,638 by the end of 2018, some $19,000 less than the initial forecast. Nonetheless, this is still $8,000 above the current price, and indicates that there is plenty of value to be had in cryptocurrency investments.