Bitcoin’s Decline Takes a Big Bite Out of the Cryptocurrency Market

Written by:
Guest
Published on:
Jul/02/2018
It was not all that long ago that Bitcoin’s value as the top crypto in the digital currency industry hovered near $20,000. That was in December of 2017 and since then the value has declined almost 70 percent to a tenuous bottom level of $6000.
 
Most recent figures have Bitcoin trading at $6605. The bear market continues and in its wake over 800 other cryptocurrencies have lost all of the value to the point of being worthless. According to a recent news report by Army Of Bitcoin, the rapid decline of the entire crypto currency market does show some parallels to the dotcom bubble in the year 2000. While new projects continue to pop up here and there, the fact that over 800 cryptos are effectively dead has dulled most of the luster this industry enjoyed prior to this dramatic downward turn.
New cryptos are formed through a process known as an Initial Coin Offering or ICO for short. This is where start-ups or established companies looking to raise capital will release its ICO to investors. You do not receive an equity stake in the company by buying these coins, but they can be used to purchase the company’s product or services.
 

Speculation is the main reason investors turn towards ICOs. This report states that $3.8 billion was raised through ICOs in 2017. That amount as already topped $11.9 billion through the first two quarters of 2018 according to the crypto gambling sites at PlaySlots4RealMoney.com, which is a website that tracks the cryptocurrency market. Unfortunately in the absence of any real government regulation, many of these ICOs turned out to be fraudulent scams. Some have failed because the proposed product never materialized. Another industry website, DeadCoins lists all the cryptos that fall into these two categories to come with the 800 that are now considered worthless. The fast and steady decline of Bitcoin from last December’s high appears to be following in the same path as NASDAQ’s sharp decline in 2000. The failures of multiple cryptos is now being compared with all the value that was lost when the dotcom bubble finally burst.

 

There are reasons for the rapid decline such as the hacking of two South Korean cryptocurrency exchanges. However, ICOs should be considered a very high risk investment even under the best of market conditions. Proponents still hail these ICOs as a viable alternative to IPOs (Initial Public Offerings) and venture capital funding. Earlier this year, CNBC released information on a ICO scam known as Giza. This was a fake start-up that made off with two million in investor money. None the less, there are still quite a few crypto industry advocates touting the virtues of raising funds through a coin offering. Arthur Hays is the CEO of BitMEX, which is a cryptocurrency exchange. Last Friday he told CNBC’s “Fast Money” that bitcoin could reverse its current bearish slide and rise to a level of $50,000 in an all-out bull market. That would hinge on government regulators taking a more favorable stance on the entire cryptocurrency industry as a whole.

Business/Financial News

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