Crypto Market Review 2018
“History doesn't repeat itself, but it often rhymes.” - Mark Twain
If we asked Mark Twain his opinion regarding the crypto market, this might be his most likely the answer. After witnessing record performances in 2017, two thousand eighteen was a very volatile year for cryptos. Despite disappointing performances, there is a substantial community of blockchain believers and the interest in the industry has never been greater. This year the all-time record was broken in terms of financing raised for ICOs (telegram 1,7 bn). BitMEX, the world’s largest crypto asset futures exchange saw its volumes explode. It was also a great year in terms of, new crypto hedge funds, institutional money flowing in, new blockchain projects being launched by big companies, major stock exchanges adopting crypto and the list goes on.
This year, also, saw some disappointments, waves of anger, under performances, misleading information. Markets can crash, nevertheless, innovation and evolution are never reversed.
On 7th of January 2018, the total market capitalisation of crypto-assets reached its all-time high with a total market value of over 800 billion dollars after rising tenfold in the last three months of 2017. Since then, the crypto market has fallen by 85% from the high - following the typical bubble burst pattern. However, the interest in the industry has never been so great and with an increasing number of institutions entering the market, the news flow is favourable.
Photo credit: Swissborg
While 2017 was the year of exponential price increases, 2018 saw a massive bear market. The market, however, can not be reduced to just these two phases. Let us take a closer look at what happened in terms of market.
The total market capitalisation chart, presented left, is a textbook case of a speculative bubble with a mania phase (at the end of the year 2017), a blow-off phase, finally, followed by a capitulation phase.
Photo credit: Swissborg
At the time of writing this study, it is possible to claim that the capitulation phase has taken place
and that the market will start to recover. Since its peak on the 17th of December 2017, Bitcoin has lost more than 80% of its value. As in any bubble, a crowded market of overly optimistic investors turned into a sudden crash in price due to a bearish ripple effect of early Bitcoin adopters taking profit (we must recall that, at the peak, the Bitcoin price was multiplied by more than 70 since 2013 and more than 17’000 since the beginning of 2011), and by institutional money reaching stop-loss according to their strict risk management processes, ICOs, in need of fiat currencies to pay their team and retail investors, burned with the leverage offered by brand new crypto exchange platforms.
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