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With the current market conditions, many are wondering if we will see another crypto crash like we did in 2018. Let’s take a look at the current market conditions and see if a crash is likely.
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Introduction
It’s been a wild ride for cryptocurrencies over the past few years. Bitcoin, the most well-known cryptocurrency, shot up in value from around $1,000 in early 2017 to just under $20,000 by the end of the year. Other major cryptos saw similar gains, and the total market capitalization of all cryptocurrencies grew from around $17 billion at the beginning of 2017 to almost $800 billion by the end of December.
But 2018 was a very different story. By mid-January 2018, the total market cap had already fallen back below $700 billion, and further sell-offs throughout the year brought it down to around $100 billion by December — a decline of more than 80% in just 12 months. So what happened? And is there any chance that we could see another crypto crash in 2019?
What caused the last crypto crash?
In 2018, the crypto marketcap fell from an alltime high of $835 billion to $100 billion. So, what caused the last crypto crash?
Some say that it was due to the Mt. Gox hack, while others attribute it to Chinese regulation. However, the most likely cause was a combination of both.
The Mt. Gox hack occurred in February 2014, and resulted in the loss of 850,000 BTC (worth $450 million at the time). This caused a lot of panic selling, and the market crashed by over 50%.
In September 2017, China announced that it was banning all ICOs and exchanges. This caused a lot of uncertainty and selling, leading to a crash of over 40%.
Finally, in January 2018, there was a perfect storm of bad news: South Korea hinted at a crypto trading ban; US regulators filed lawsuits against Ripple and Tether; and China increased its crackdown on crypto trading. This led to a crash of over 80%.
Will there be another crypto crash?
It is impossible to say with any certainty whether or not there will be another crypto crash. Cryptocurrencies are decentralized and therefore their prices are dependent on a number of factors, many of which are out of our control. That being said, it is important to remember that the crypto market is still in its infancy and as such, it is subject to a great deal of volatility.
There are a number of reasons why the prices of cryptocurrencies could crash again in the future. For one, governments could decide to crack down on the use of cryptocurrencies, as they have done in the past. This could lead to a loss of confidence in the market and a sell-off of assets. Additionally, if there is another major hack or theft from a major exchange, this could also lead to a price drop.
Of course, it is also possible that the market could simply experience another period of corrections or consolidation after recent gains. This is not uncommon in any market and does not necessarily mean that there will be a crash. However, it is always important to be prepared for anything and to only invest what you can afford to lose.
What can you do to protect your investment?
Here are a few things you can do to protect your investment in the event of another crypto crash:
-Diversify your portfolio: Don’t put all your eggs in one basket. Diversifying your portfolio across different asset classes will help to protect you from losses in one specific asset class.
-Invest in quality projects: Do your research and invest in quality projects that have a strong team, sound technology, and a real use case. These projects are more likely to weather any storm and come out stronger on the other side.
-HODL: This term, which stands for “hold on for dear life,” is often used in the crypto community. Basically, it means holding onto your coins even when the price is dipping. The thinking is that the price will eventually come back up and you’ll be able to sell at a profit. This strategy does require patience and discipline, but it could pay off in the long run.
Conclusion
The Bottom Line
To sum it all up, whether or not crypto will crash again is really up to you. It depends on your level of risk tolerance, your investment strategy, the market conditions at the time, and a host of other factors. However, if you believe in the underlying technology and you’re prepared to hold for the long term, then there’s no reason why you can’t make a profit in this volatile market.
