Can the Crypto Market Ever Recover?
After the January 2017 crash, people are wondering what the future of crypto is. Can the crypto market ever recover?
The crypto market was at a fever pitch in November of 2017. Everyone was talking up Bitcoin, asking which alt-coin would be the next to boom, and swearing that they would hold onto their Bitcoin until the day they died.
It was a glorious time when every person was able to feel confident in Bitcoin and crypto. Bitcoin was going up, up, up... until it crashed in one of the most devastating months to ever happen to Bitcoin.
Almost overnight, the price of Bitcoin went from $20,000 per coin, to a total trading price of $7,000 in January. Bitcoin's value shrank by over a third. Because of this, people are worried about whether it will ever be the massive investment vehicle it once was.
Can the crypto market ever recover? Let's take a look at the facts.
There have been at least three other crypto crashes that have seen equally devastating losses in the earlier times of Bitcoin. At one point, Bitcoin's price dropped from $32 to a measly $2. Clearly, it's recovered with a little extra to spare.
Though past performances are never a full guarantee of future results, it's a good sign. If it could overcome major crashes in 2012, 2013, and 2014, then there's a good chance it will recover from the one in 2018. When Bitcoin crashes, everything else crashes too.
From this standpoint, it's not about asking, "Can the crypto market ever recover?" It's a question of when it will.
Wait! Not so fast!
A lot of people, when asked about the crypto market, are very skeptical, and rightfully so. The crash from January 2018 was far different, simply due to the scale of investors who were affected by it.
The crypto market exploded, and everyone was interested in buying cryptocurrency as part of their portfolios. This even included people who weren't invested in technology as part of the crowd.
The scale, as well as the type of investors, is greatly different. So, the past might not always be a good indicator of survival.
When the major crash happened, a lot of casual investors got burned. Some were also caught in the massive Mt. Gox scandal, one of the biggest cryptocurrency scandals you need to know about if you want to invest.
Between the theft of Bitcoin and the crash, many people took to social media to dissuade others from investing in Bitcoin. We'd be lying if we didn't say that it didn't cause others to pull out of investing.
At the very least, the fuel to the Bitcoin fire has been quashed. People are no longer as enthusiastic as they once were.
It also doesn't help that many traditional investing gurus loathe crypto.
Do you love Warren Buffett's intellectual advice? Do you enjoy reading about quality stocks? Almost anyone who is a big time value investor will advise you against cryptocurrency—and rightfully so. It doesn't mesh with value investing's strategy.
Buffett himself warned against crypto because it technically doesn't have any value aside from what people ascribe to it. He even called it "rat poison, squared!"
The ICO scams that the crypto market dealt with after the Bitcoin crash didn't help, either.
The crypto market is also suffering from a major spate of bad press for Initial Coin Offerings. More specifically, it seems like the once-reliable ICO market has become clogged with scams.
Many worthless ICOs that turned out to be scams can be listed by casual investors, simply because they keep making news headlines. It's bad, and it looks bad.
Sadly, around 80 percent of all ICOs will be scams this year. That number continues to climb, and that's making a serious dent in the faith people have in crypto.
There have been a lot of cryptocurrencies that have been proven to be scams. Many currencies, including those that seemed totally legit, have been used to raise money for scam artists who would vanish after taking in a million dollars or so.
The demographics of investors started to change.
In the early stages, the crypto market was a highly niche investment platform that only a select few dabbled in. It was a niche that was solely relegated to STEM workers, hackers, and the occasional criminal.
Now, people from all walks of life are using it. It's no longer niche, and while that may seem like a good thing at first, it's not always great. If the mainstream pans it, the chances of cryptocurrency being stuck at a minimal price are high.
For some, it's a question of, "Should the crypto market ever recover?"
The crypto market definitely has its problems. It's been linked to sales of banned content, drugs, and weaponry. It's been used as a form of money laundering. There have been countless scams, thefts, and hacks through cryptocurrency exchanges.
At one point or another, many investors are beginning to grow weary of what they're seeing. Some are starting to wonder if investing in crypto is a fool's errand.
As of right now, it's been a slow bleed.
It's been well over half a year since the last crash happened, and Bitcoin's price really hasn't improved to the pre-crash levels yet. In fact, it's been volatile while still steadily decreasing as months past.
If the crypto market can recover, it'll be a while. And, it'll take a lot of positive PR for this to happen.
The good news is all is not lost.
The crypto community is still tight knit as ever, and there have been plenty of movements to make crypto safer, more user-friendly, and more heavily regulated. Should the community get better about hacking and actually evolve to become better, it's very possible that we'll see a crypto renaissance.
Besides, the crypto community now has a lot of defenders who want to see Bitcoin and other cryptos succeed.
It's important to remember that it's not just people involved in crypto anymore—and that could be crypto's saving grace.
Unlike the last couple of times, crypto really isn't just a "person" industry anymore. There are plenty of major corporations that have started to invest in Bitcoin and blockchain technology, including SquareSpace, Overstock, Microsoft, and Merrill Lynch.
With the help of major corporations, can the crypto market ever recover? Quite possibly, thanks to the resources they offer.