Bitcoin prices fall as the Crypto Summer slows downJuly 2, 2019
It looks like a roller coaster known as the crypto market knows no limits to its possibilities, both in climbing and descending. In a matter of days since the growing number of analysts and industry express declared the crypto winter over and a onset of a summer season in the markets, the prices crashed with a vengeance.
In just one week, bitcoin alone fell by over 30 percent and lost more than 4,000 since its latest peak value at around $14,000. In a single day, the biggest cryptocurrency in the world fell down by over 8 percent. Bitcoin previously took only hours to break through the barriers at $12,000 and $13,000.
However, its slide was nearly as impressive, of course to all those who have not invested heavily in the market in the previous period. Like clockwork, many stepped to the challenge of explaining both the rise and the quick fall of crypto in this period, offering everything from possible culprits to complete nonsense. But, regardless of the cause, does all of this mean that the crypto summer is not here in its full sunny glory?
Slow Start of the Year
There is no doubt that the start of 2019 was not great for the crypto market. Of course, it began with the end of 2018, where many saw bitcoin at well over $20,000 just a year before, in the heyday of 2017 crypto boom. For most of 2019, there were no such high hopes and the price stayed in the $6,000 range.
Then, however, it began a slow ascent that was solidified with the end of May. Here, most agree that there was a big and strong galvanizing factor that was unnoticed by the mainstream media – Facebook Libra.
While the road to this corporate cryptocurrency was plotted out months ago, the public became fully aware of it at the end of spring of this year. This was followed by an official white paper from Facebook and it was seen by many as the strongest validation of the crypto potential since bitcoin began working in 2009.
Still, Libra was and still is a year away, so investors poured their money into the existing crypt options. This once more showed a deep and very widespread misunderstanding of the entire notion of the crypto market, but it still propelled the prices up. The swing up did not last as long as many hoped. What is even worse is the fact that the drop came harder than many saw as possible.
Swing Back from the Crypto Summer
Bitcoin has dropped, but so have other digital currencies, including other major ones. Ethereum saw its token go to $365 but it is currently trading in the range of $290. The strongest pull-down took the price of $270. On the previous Sunday, there was a huge short order on bitcoin and its inevitable drop.
This sparked panic among many of the investors, including the biggest ones. The sell-off came fast and hard. Of course, this is nothing new for the crypto domain and only the recent past saw more than its share of similar tectonic movements. In other words, the wild swings are completely normal phenomena. Because of this, analysts today, like in esports and other digital domains, are forecasting everything from bitcoin swinging back up to $20,000 but also going down as low as $3,000 or even lower.
Yet, these spectacular collapses continue to catch and hold the imagination of the public, usually on the negative side. Longtime critics of the crypto space, like Nouriel Roubini, used the opportunity to once more state that bitcoin is worthless or even holding a negative value. But, in the time-honored tradition, these voices rarely if ever provide an explanation for the actual movements in the present time.
The Libra Factor
Unlike the critics, other analysts and industry leaders point to the presence of Libra cryptocurrency in the minds of most investors who rushed in the recent bull run. It provided no direct benefit but it did offer the value of legitimacy for those who were wondering how they could enter the crypto space.
The fact that even Facebook is doing crypto was the green light many were desperately hoping for. Today, the element of the fear of missing out is the ever-present drive for so many individuals on so many levels. The crypto space showed it is no different once again, just like it did back in 2017.
However, like with the pullback, the issue of what is permanent value and what is a transient trend is something many continue to grapple with. Facebook Libra is a centralized system that has very little to do with bitcoin, even on a purely technological level.
After all, the network that props it up is not a blockchain that is designed to provide a reward to those who support it. It is not even a traditional hash-based network, but only uses the element of blockchain to allow for instant ledger re-balances after transactions. Of course, it will likely have many useful elements and millions and then billions will use it. But, saying that bitcoin and Libra are similar shows that the person saying it fails to understand both almost completely, except for the most basic level imaginable.
The crypto winter is definitely over, but the crypto summer is definitely still not here. Instead, we are in a state of crypto spring where the chance of a rise in value is present, but nothing on the scale that the crypto evangelist hope for. At the same time, people like Roubini will also have to wait a bit more before cryptocurrencies explode in a giant financial mushroom cloud. The value of a network lies in a multiple factor setup where one thing pulls and pushes on all other.
This is very different from the traditional financial domain, but still, modern society keeps trying to superimpose the same values on crypto and keeps failing time and time again. Hopefully, the ongoing crypto spring will be able to show how space actually works at least to some people.