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On Dec. 7, 2017, the price of bitcoin was above $ 17,000. Nine months later, it's below $ 7,000.
Bitcoin (BTC), the primary cryptocurrency, is down more than 60% in 2018. The rest of the market looks even worse. Bitcoin has not taken as brutal a hit as most of the other cryptocurrencies this year, but it has shown a closer correlation with the other corners recently, which means that they are bitcoin pulling down with them.
Ether (ETH), the token of the Ethereum network, is down more than 75% in 2018 and has sunk so much that it has lost its spot as No. 2 cryptocurrency by market cap to ripple (XRP), which is down more than 85% in 2018. Rounding out the top coins by bitcoin cash (BCH), down more than 80%, and stellar lumens (XLM), down more than 60%.
The cryptocurrency market in 2018 is ugly, and some people are panicking.
Prices of BTC, ETH, and XRP in 2018, the three biggest coins by market cap, through Sept. 7. (Chart: Daniel Roberts / Yahoo Finance)
As always in crypto, there is a lot of circulating misconceptions. So it helps to take a look at the facts.
Why crypto prices are down
On Wednesday, Business Insider reported that Goldman Sachs has been saying its plans to launch a crypto futures trading desk. But by the next day, CFO Goldman Martin Chavez called the report "fake news." He also said Goldman's entire crypto strategy is still in "exploration" mode, which suggests that the initial hype around Goldman's crypto interest, ignited by a report in May , was overblown all along.
The reality is that it has been plummeting this year, due to multiple major concerns, all of which is more than goldman Sachs does not want to do with bitcoin. (Most likely, the bank does not actually know yet.)
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "There are serious concerns about whether SEC will ever exchange of traded funds (ETF), an investment vehicle in Credits Trading. SEC rejected a bitcoin exchange-traded fund (ETF) from Cameron and Tyler Winklevoss for the second time. In August, the SEC is in the process of ETF from Van Eck, with a decision now expected in late September. "Data-reactid =" 59 "> There are serious concerns about whether the ETF will ever approve of a bitcoin. exchange-traded fund), in July, the investment vehicle is crucial to bringing legitimacy to crypto trading. SEC rejected a bitcoin exchange-traded fund (ETF) from Cameron and Tyler Winklevoss for the second time. In August, the SEC is delayed in its decision ETF from Van Eck, with a decision now expected in late September.
There are also serious concerns about the ether, which has fallen in the farthest in recent weeks of any major wedge. It turns out that the slew of startups that ICOs (initial coin offerings), which are typically conducted in ether, or rushed to cash out their ether or failed entirely. Basically, the proliferation of scammy ICOs has a negative light on ethereum.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "And then there are the issues regarding tether, a "stablecoin" at the end of 2017. Tether, the company behind tether tokens, was subpoenaed by the CFTC in December along with the crypto exchange Bitfinex, and May the CFTC and Department of Justice launched a criminal investigation into manipulation of bitcoin prices. The findings of that probe are still unknown, creating even more uncertainty."data-reactid =" 65 "> And then there are the issues regarding tether, a "stablecoin" at the end of 2017. Tether, the company behind tether tokens, was subpoenaed by the CFTC in December along with the crypto exchange Bitfinex, and May the CFTC and Department of Justice launched a criminal investigation into manipulation of bitcoin prices. The findings of that probe are still unknown, creating even more uncertainty.
Crypto believers hold on
And yet, amidst the 2018 crypto crash, there remains a huge ecosystem supporting its financial instruments. These believers typically fall into one of three factions:
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "1. Coin speculators: These are people who have not been convinced of their ability to buy, buy and sell crypto as a speculative investment. They want to get back to their homepage. "Data-reactid =" 68 ">1. Coin speculators: These are people who have not been convinced of their ability to buy, buy and sell crypto as a speculative investment. They want to go to the sake of their return.
Many of these are the institutional investors and new funds that have been rushed in. This group also includes people who bought up bitcoin, ether, litecoin, ripple, and other coins during the run-up at the end of 2017, in the hope that prices would rise further. (They did the opposite.) Some of those folks, according to you, you can easily find them, bought them last year. Others hold their coins and are eager and anxious to see them go back up.
Amid the fervor, established fintech players Robinhood and Square set up easy crypto buying options newbies who want to invest.
Cryptocurrencies have plunged in 2018. (Photo: Getty)
Morgan Creek Capital Partners is just one of many examples of established hedge funds that have been set up for crypto trading operations. Morgan Creek is launching a crypto index in partnership with Bitwise.
"We are in the business of institutional investors saying, 'How do we get exposure to crypto?'" CEO Mark Yusko said. "Our hashtag is #GetOffZero. Zero is the wrong allocation to this asset going forward. "
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "2. Blockchain, not bitcoin: These are the big banks or traditional Wall Street types who have dismissed the viability of bitcoin, the cryptocurrency, but hype the applications of blockchain technology. "Data-reactid =" 86 ">2. Blockchain, not bitcoin: These are the big banks or traditional Wall Street types who have dismissed the viability of bitcoin, the cryptocurrency, but hype the applications of blockchain technology.
Bitcoin believers insist that it's silly to try to divorce them. After all, the argument goes, the idea of a blockchain (ie, a decentralized, peer-to-peer ledger) originated with the invention of bitcoin in 2009. technology without having to touch cryptocurrencies.
JPMorgan CEO Jamie Dimon is among this group. In a Harvard Business Review interview last month, Dimon said cryptocurrency is "not the same as gold or fiat currencies. Those are supported by law, police, courts. They're not replicable, and there are strictures on them. Blockchain, on the other hand, is real. We're testing it and will use it for a whole lot of things. "
And even those who dismissed bitcoin but did not know what to do with blockchain blockchain.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "3. Bitcoin believers: This group includes the bitcoin enthusiasts who have believed in the space of developers, programmers, and entrepreneurs who still think of bitcoin (or other cryptocurrencies). They believe in the power of digital assets themselves, not just the rails they run on. "Data-reactid =" 101 ">3. Bitcoin believers: This group includes the bitcoin enthusiasts who have believed in the space of developers, programmers, and entrepreneurs who still think of bitcoin (or other cryptocurrencies). They believe in the power of digital assets themselves, not just the rails they run on.
You could put many of the earliest, well-funded crypto startups in this camp, like Coinbase, which some have called Goldman Sachs or Google of crypto, or Blockchain, the biggest provider of free software for storing your crypto. You can not do anything here.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "These folks often use the phrase" internet of money "Balaji Srinivasan, founder of the bitcoin startup Earn.com (which Coinbase acquired this year), framed this vision to Yahoo Finance in 2016: Bitcoin can create a" machine economy "that would,""In other words, it would be an Internet of money that has all kinds of positive implications for the needs of those who pay for online content or storing a contract. That has not exactly happened yet, but it is coming."data-reactid =" 103 "> These folks often use the phrase" internet of money. "Balaji Srinivasan, founder of the bitcoin startup Earn.com (which Coinbase acquired this year), framed this vision to Yahoo Finance in 2016: Bitcoin can create a "machine economy" that would, ""In other words, it would be an Internet of money that has all kinds of positive implications for the needs of those who pay for online content or storing a contract. That has not exactly happened yet, but it is coming.
Blockchain CEO Peter Smith (L) and Chain CEO Adam Ludwin (R) at the Yahoo Finance Summit: Crypto on Feb. 8, 2018. (Gine DePinto / Oath)
The people in this group are mostly at the idea of "blockchain without bitcoin." As Chain CEO Adam Ludwin said at Yahoo Finance's All-Markets Summit: Crypto in New York in February: "Think of the asset first, not the architecture first."
Anticipating the 'Trust net'
Of course, none of these are people who are not fit into any of these groups. There are many crypto traders who are trading these assets because they believe in the technology.
Morgan Creek's Yusko is one such believer – or at least claims to be. He says cryptocurrencies and the rails they run on the net trust, which is going to start in 2024. "
The bottom line: With so many people still holding on to crypto, for whatever reason, the assets are here to stay, regardless of the highs and lows of price drama.
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<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Daniel Roberts covers cryptocurrency and blockchain at Yahoo Finance. Follow him on Twitter @readDanwrite. "data-reactid =" 121 ">Daniel Roberts covers cryptocurrency and blockchain at Yahoo Finance. Follow him on Twitter @readDanwrite.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Read more:"data-reactid =" 122 ">Read more:
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