Bitcoin and cryptocurrency crash since February 2018
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From early February 2018, a real crash shook King Bitcoin and the entire cryptocurrency market. Crypto-investors called the crash a real "blood bath". For example, Bitcoin went from $20,000 to $7,000 in just a few days. And as I write this article, there is no indication that this crash is over.
The end of 2017 was marked by euphoria on the cryptocurrency market; Bitcoin went from $10,000 to $20,000 in just a few days. Crossing of the symbolic $10,000 bar generated unprecedented media interest.
During the 2017 year-end holidays, all cryptocurrency investors certainly must have talked to their friends and relatives about cryptocurrencies, the future of the blockchain, the potential capital gains for participating in the ICOs of new cryptocurrencies, the potential gains that could be made by trading cryptocurrencies, the capital gains they managed to record in 2017.
Result: at the beginning of January 2018 some cryptocurrency trading platforms were saturated with account openings; see: Binance: the best platform for trading cryptocurrencies?
It's often said in the stock market that when your baker tells you about a stock to invest in, it's time to sell. With cryptocurrencies it is even worse.
Rumours about a ban on cryptocurrencies in China, South Korea and then India caused great concern among cryptocurrency investors. In these three countries, the governments wanted to lift the veil of anonymity in cryptocurrency transactions, and wanted to see this new market better managed.
Other unfounded ban announcements, partly denied, created a feeling of uncertainty among cryptocurrency investors named "FUD" (Fear, Uncertainty and Doubt).
However, some cryptocurrency analysts believe that market regulation could only “reassure" investors more; although other analysts talk about cryptocurrencies in different ways, it is impossible to stop them.
On 29 January 2018, Coincheck’s cryptocurrency trading platform was hacked. Coincheck is the second biggest cryptocurrency trading platform in Japan (country leader in terms of cryptocurrencies traded), this news only reinforced feelings of cryptocurrencies’ insecurity. That is to say that nearly 260,000 investors had their NEM cryptocurrencies stolen on the Coincheck platform, with a total value of nearly 530 million dollars.
However, the Coincheck platform manager apologized publicly and guaranteed that each customer would be refunded in full.
As if the news was not bad enough, a few days later American authorities summoned the managers of the Bitfinex platform and the Tether cryptocurrency. Bitfinex, one of the biggest cryptocurrency trading platforms, records nearly 7% of the total volume of cryptocurrency trades. Tether is a cryptocurrency that is widely used by all traders and present on all cryptocurrency trading platforms.
These two companies are managed by the same general manager. The Commodity Futures Trading Commission has something to look forward to.
But this is not what really sparked the U.S. agency; in reality, Tether was never able to prove that it held enough U.S. dollars to ensure the solvency of its cryptocurrency. And by chance, on 27th January, Tether put an end to its collaboration with the company whose job was precisely to carry out an audit of its accounts.
The fear that Bitfinex would collapse, and that the Tether would disappear, caused panic among many investors.
Reminder: Why do traders need Tether or a cryptocurrency to mimic fiduciary money at parity?
Some rumours suggest that Wall Street investors have bet on the fall of Bitcoin, thanks in particular to futures Bitcoin contracts. It could be that the correction effect has been slightly amplified. But it is above all the snowball effect of all the bad news that generated a Bitcoin crash, itself generating a crash of all cryptocurrencies; because we can now demonstrate it: when King Bitcoin falls, all cryptocurrencies fall.
What are the reasons for this Bitcoin and cryptocurrency crash?
1 - A need for market correction
The end of 2017 was marked by euphoria on the cryptocurrency market; Bitcoin went from $10,000 to $20,000 in just a few days. Crossing of the symbolic $10,000 bar generated unprecedented media interest.
During the 2017 year-end holidays, all cryptocurrency investors certainly must have talked to their friends and relatives about cryptocurrencies, the future of the blockchain, the potential capital gains for participating in the ICOs of new cryptocurrencies, the potential gains that could be made by trading cryptocurrencies, the capital gains they managed to record in 2017.
Result: at the beginning of January 2018 some cryptocurrency trading platforms were saturated with account openings; see: Binance: the best platform for trading cryptocurrencies?
It's often said in the stock market that when your baker tells you about a stock to invest in, it's time to sell. With cryptocurrencies it is even worse.
2 - A decentralized market that does not want regulation
Rumours about a ban on cryptocurrencies in China, South Korea and then India caused great concern among cryptocurrency investors. In these three countries, the governments wanted to lift the veil of anonymity in cryptocurrency transactions, and wanted to see this new market better managed.
Other unfounded ban announcements, partly denied, created a feeling of uncertainty among cryptocurrency investors named "FUD" (Fear, Uncertainty and Doubt).
However, some cryptocurrency analysts believe that market regulation could only “reassure" investors more; although other analysts talk about cryptocurrencies in different ways, it is impossible to stop them.
3 - A hacked cryptocurrency trading platform
On 29 January 2018, Coincheck’s cryptocurrency trading platform was hacked. Coincheck is the second biggest cryptocurrency trading platform in Japan (country leader in terms of cryptocurrencies traded), this news only reinforced feelings of cryptocurrencies’ insecurity. That is to say that nearly 260,000 investors had their NEM cryptocurrencies stolen on the Coincheck platform, with a total value of nearly 530 million dollars.
However, the Coincheck platform manager apologized publicly and guaranteed that each customer would be refunded in full.
4 - Fears about the Bitfinex trading platform and the Tether cryptocurrency
As if the news was not bad enough, a few days later American authorities summoned the managers of the Bitfinex platform and the Tether cryptocurrency. Bitfinex, one of the biggest cryptocurrency trading platforms, records nearly 7% of the total volume of cryptocurrency trades. Tether is a cryptocurrency that is widely used by all traders and present on all cryptocurrency trading platforms.
These two companies are managed by the same general manager. The Commodity Futures Trading Commission has something to look forward to.
But this is not what really sparked the U.S. agency; in reality, Tether was never able to prove that it held enough U.S. dollars to ensure the solvency of its cryptocurrency. And by chance, on 27th January, Tether put an end to its collaboration with the company whose job was precisely to carry out an audit of its accounts.
The fear that Bitfinex would collapse, and that the Tether would disappear, caused panic among many investors.
Reminder: Why do traders need Tether or a cryptocurrency to mimic fiduciary money at parity?
5 - Rumours of short selling
Some rumours suggest that Wall Street investors have bet on the fall of Bitcoin, thanks in particular to futures Bitcoin contracts. It could be that the correction effect has been slightly amplified. But it is above all the snowball effect of all the bad news that generated a Bitcoin crash, itself generating a crash of all cryptocurrencies; because we can now demonstrate it: when King Bitcoin falls, all cryptocurrencies fall.
