17 mins ago |
By Jamie Redman – |
The Current Crypto-Bear Run Will be Nothing Like 2014
Since the beginning of the new year, the past three months has seen most cryptocurrencies lose over 60 percent of their values. Bearish markets have started to spark 2014 memories when BTC/USD markets and many altcoins suffered from a year-long downturn. Surely there have been few similarities to the current 2018 bear run and the one that took place four years ago. However there are some deep ecosystem contrasts within the crypto-space that leads one to believe this bearish sentiment won’t last as long — 2018 is not even comparable to the time BTC was called the “worst currency of the year.”
The Stark Difference Between 2014 and Now
If you trade or hold cryptocurrencies you’ve probably heard many speculators say that we are experiencing a crypto-depression that will likely resemble the infamous 2014 bear run. In January of 2014, the price of BTC dropped from $864 per coin to roughly $200 over the course of the year. Mainstream media deemed the cryptocurrency the “worst currency of the year” as its performance was extremely lackluster against nation-state issued currencies. Things started looking better during the beginning of 2015 after BTC became unprofitable to mine in certain regions. Even though BTC prices lost 60 percent of their value that year things were a whole lot different. For instance, the spike that led to the 2014 bear run just before Mt Gox went under was much quicker and short-lived bull run.
The 2017 bull run lasted all year long with only around seven 20-30 percent corrections in between. Back in 2014, there were a bunch of hacked exchange incidents that affected the market significantly. Fallen trading platforms like Mt Gox and Mintpal left a significant mark on cryptocurrency markets. These days things have changed quite a bit. One great example is the Bitfinex hack which did affect markets temporarily, but after BTC/USD markets resumed the bullish upturn and continued to climb unaffected. In 2018 the Japanese exchange Coincheck lost more funds (the amount of USD loss at the time of both incidents) than Mt Gox, and this occurrence only affected markets for a day or two. This means cryptocurrency markets have been far more resilient to exchange breaches and in both of these examples, Bitfinex and Coincheck are still operational — unlike the fallen exchanges in 2014.
A Large Scope of Infrastructure and Mainstream Investment Vehicles
Back in 2014, there were not as many brokerage services and trading platforms compared to today. Now the cryptocurrency ecosystem’s infrastructure dwarfs 2014’s environment by a long shot. There are many exchanges and businesses that make it convenient for investors to purchase digital assets. There are wallets, a variety of full node protocols, payment processors, institutional and OTC dealers, brokerage services, and exchanges that offer a wide variety of crypto-assets. These businesses are committed to keeping cryptocurrency interest alive and well. Further unlike 2014, there is a vast amount of traditional crypto-investment vehicles like futures, options, exchange-traded notes, hedge funds, and indexes. These types of digital asset investments have attracted the attention of mainstream investors, and everyday joes who’ve just recently heard about the rise of cryptos.
Mainstream Media Coverage and Average Joes Are Hearing About Cryptos
Back in 2013-2014 the price of BTC and other altcoins did catch the attention of mainstream media (MSM). However, the price of BTC during the December all-time high reached roughly $1,250, a big difference in comparison to the recent $20K price BTC almost captured. In 2017 when the bull run was barrelling at full speed the price of BTC touched $5K, and the MSM started dedicating weekly broadcasts and headlines dedicated to the cryptocurrency. When the digital asset touched $10K, the headlines were daily stemming from well-known news outlets like Bloomberg, the Wall Street Journal, CNBC, and Time Magazine. CNBC, in particular, has focused a lot of energy towards cryptocurrencies within its online publication and its regularly scheduled television broadcasts like “Fast Money.” In 2014 the only time MSM reported on cryptocurrencies is when it wanted to make fun of the market losing considerable value for over twelve months.
One Thing is for Sure There’s Never a Dull Day in Bitcoin-Land
In 2014 and even 2015 not that many people knew about bitcoin and other altcoins. Back in February of 2014, the Wall Street Journal reported that 76 percent of Americans didn’t know what bitcoin was, and had never even heard of it. 80 percent of those surveyed said they would not bother with cryptocurrencies, and would rather invest in gold. In 2017 when BTC/USD markets surpassed $10K per coin a good majority of people had started hearing about bitcoin from multiple facets. The Wall Street Journal’s front page of it’s printed edition covered the $10K milestone and wrote: “even grandma is in.” Six months ago according to a Lend EDU study, 78.5 percent of U.S. residents polled had heard of bitcoin and 11 percent owned some. Another recent survey concluded that 88 percent of residents living in Japan have heard about bitcoin. On the global level statistics are just as staggering as cryptocurrencies are trending in Venezuela, Brazil, Colombia, Africa, Russia, Sweden, Switzerland, Australia, South Korea and many more regions.
The beginning of the ‘crypto-winter’ at the end of 2017 and the last three months of 2018 is a stark comparison to four years ago. It seems unlikely that the bear market this time around will last as long as it did with little infrastructure, barely any media coverage unless it was a negative story, hacked exchanges never came back or re-paid customer balances, there was only one mainstream investment vehicle (GBTC) at the time, and no one knew much about cryptocurrencies at all.
It’s been a pretty brutal bear run over the past three months, but it’s likely the market sentiment won’t last near as long. With the number of individuals and businesses with skin in the game, its very probable over the long term cryptocurrencies will continue to rise in value against fiat currencies — even after this tumultuous value cycle. There will always be one guarantee in the world of cryptocurrency — it’s never a dull day in bitcoin-land.
What do you think about the contrast between now and 2014? Do you think crypto prices will suffer the same fate as that year? Let us know in the comments below.