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The bad days are back. Crypto prices are plummeting and nobody really knows where the bottom is. Even powerful Bitcoins were not spared, prices plummeted below the $ 6,000 mark – considered by many as an unofficial floor – and then dropped below $ 5,000. What is going on?
Three recent events could explain the current collapse. The first is the announcement Friday by the SEC that the operators of two "Initial Coin Offerings" (ICO) have broken the law by selling unlicensed titles and must pay fines and restitution. As others have pointed out, this is only a beginning: Crypto 's staffers have spent most of 2017 stinging the SEC, and now , the bear is awake and ready to face a world of punishments. This development may be enough to scare some investors in crypto, but it is hardly surprising. Anyone interested in the regulatory space knew that this was going to happen, and a lot of the spinoffs should have already been incorporated into the price of encryption tokens.
Likewise, it's hard to see how last week's Bitcoin Cash fork – a second possible explanation for crypto collapse – could upset the market. Of course, the range was messy and created new concerns about the centralization of Bitcoin Cash. This hurt the price of Bitcoin Cash and probably spread the contagion to the rest of the market. But Bitcoin Cash has always been shady and dysfunctional, and the crypto world has already resisted, so it's hard to see how that caused the crash.
This leaves a third possibility: Crypto investors have been frightened by the bad news from chip makers Nvidia and Advanced Micro Devices, who recently announced a sharp drop in cryptocurrency equipment sales. Declines in sales suggest that interest in crypto has declined and is unlikely to resume soon. This could explain the cold price of cryptographic assets, but also raises a fundamental question: "Is the misery of chip makers a cause of collapse or is it just another symptom?
Of course, it is possible that this is a combination of the three events that triggered the KO'd in the crypto markets. That would be good news for investors, in a sense, because it would mean that individual shocks would explain the downturn – and that markets are recovering from shocks.
There is however a more existential explanation for the collapse: it is a collapse. This is the position of Chief Technology Officer Sam Gellman who, in a thoughtful spirit series of tweets, points out that crypto has absorbed 30 billion dollars of ICO money in two years and that it has not provided a user base beyond cryptographic speculators. It's been ten years since Bitcoin came out, he says, and there is little value to show for that. Needless to say, many people come forward to refute Gellman but, if he is right, are looking for investors to continue looking for alternatives.
Thanks, as always, for reading – many more details to please Hodlers and foes further.
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