The crypto news crash was a unique event that took place in the cryptocurrency industry. Here’s what happened and what we can learn from it.
Checkout this video:
On January 16, 2018, the crypto market entered a sharp downward spiral. In the space of 24 hours, Bitcoin (BTC) lost over 15% of its value, Ethereum (ETH) plunged by 25%, and the total market capitalization of all cryptocurrencies declined by more than $130 billion. This market crash was the largest since the dotcom bubble of 2000, and it wiped out billions of dollars of investment in what was until recently a booming industry.
So what caused this sudden and dramatic sell-off? There are a few possible explanations:
1) Regulatory uncertainty: In late 2017 and early 2018, there were increasing concerns that governments might crack down on cryptocurrencies. This fear was sparked by a number of high-profile crackdowns on crypto exchanges and Initial Coin Offerings (ICOs) in China and South Korea. These fears came to a head on January 11, when the US Securities and Exchange Commission (SEC) announced that it would be scrutinizing ICOs more closely. This news likely contributed to the sell-off on January 16.
2) Profit taking: After an incredible run-up in prices in late 2017, many investors likely decided to take profits in early 2018. As prices began to fall, this selling likely accelerated, leading to the sharp decline we saw on January 16.
3) Market manipulation: One possibility is that large investors with significant holdings of certain cryptocurrencies sold off their positions abruptly, causing prices to crash. This would explain why some coins (like Bitcoin Cash and Ripple) fell by more than others. However, there is no concrete evidence that this occurred.
4) Technical factors: It’s also possible that the sell-off was due to technical factors unrelated to fundamental conditions in the market. For example, one theory is that so-called “ margin calls ” forced investors to sell assets abruptly to meet collateral requirements set by exchanges . Others have suggested that a flaw in the code of popular cryptocurrency wallet software led investors to accidentally lose millions of dollars worth of digital coins .
For now, it’s hard to say definitively what caused the crypto news crash of January 16. It’s likely that a combination of factors led to the sell-off, and it’s possible that we may never know for sure what caused it. However, what we do know is that this market crash was another reminder of just how volatile cryptocurrencies can be – an important lesson for all investors in this still nascent industry.
The Mt. Gox hack
On January 26th, 2018, Japanese cryptocurrency exchange Mt. Gox announced that it had been hacked and 850,000 bitcoins (BTC) had been stolen. The revelation sent shockwaves through the cryptocurrency community and caused the price of Bitcoin to crash by almost 50%.
Mt. Gox was once the largest cryptocurrency exchange in the world, handling over 70% of all Bitcoin transactions at its peak. The hack, which took place in 2014, resulted in the loss of 7% of all Bitcoins in circulation at the time. While Mt. Gox eventually filed for bankruptcy, it has since been revealed that some of the missing Bitcoins have been found and are now being held by a trust company in Tokyo.
The Chinese ban
In September 2017, the Chinese government crackdown on ICOs and digital currency exchanges caused a minor crash in the crypto markets. The market quickly recovered, but it was a reminder that government action is a key risk for digital currencies.
The ICO bubble
For the uninitiated, an ICO is an “Initial Coin Offering,” analogous to an IPO in the world of conventional investing. ICOs have become a popular way for blockchain projects to raise funds from investors, and 2017 saw a boom in ICO activity as the value of Bitcoin and other cryptocurrencies soared.
However, 2018 has been a very different story, and the crypto markets have been in a prolonged slump. This has caused the price of many ICO tokens to crash, leading to heavy losses for investors.
There are many factors that have contributed to the crypto market crash, but one of the most important is the ICO bubble. This bubble was fueled by hype and speculation as investors poured money into new projects in the hope of making quick profits. However, as the market has cooled, many of these projects have failed to live up to expectations, leading to widespread disillusionment among investors.
The ICO bubble burst is just one factor that has caused the crypto markets to crash in 2018. With prices still down across the board, it remains to be seen whether the markets will recover in 2019 or if this is just the beginning of a prolonged bear market.
The death of Bitcoin?
On December 22, 2017, Bitcoin hit an all-time high of $19,783.06. On December 31, it was down to $13,412.44. As of January 17, 2018, it was trading at $10,709.70. That’s a 40 percent drop in value in less than a month! So what caused the crypto news crash?
Some experts have blamed the crash on the speculation that has been driving up the price of Bitcoin and other cryptocurrencies. When people buy Bitcoin or other cryptocurrencies purely as an investment, rather than using them to buy goods and services, the price is more likely to go up and down in response to news events and market speculation.
Other experts have blamed the crash on a technical glitch on one of the largest cryptocurrency exchanges, Coinbase. On December 19, Coinbase stopped allowing customers to buy Bitcoin with credit cards. This may have caused some investors to sell their Bitcoin holdings, leading to the price drop.
Whatever the cause, the crypto news crash has led to a lot of panic among investors. Some people are even calling it the death of Bitcoin. But it’s important to remember that Bitcoin has crashed before and always bounced back. So don’t panic! The cryptocurrency market is still young and volatile, and there are bound to be more ups and downs in the future.
In conclusion, the crypto news crash was likely due to a variety of factors, including the Mt. Gox hack, Chinese exchanges shutting down, and a general lack of faith in the market. While prices have rebounded somewhat since then, it’s important to remember that the market is still highly volatile and susceptible to sudden crashes. If you’re thinking of investing in cryptocurrencies, be sure to do your research and only invest what you can afford to lose.