Why the Bitcoin Crash Is Actually Good for the Market
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The cryptocurrency market has had a wild ride in recent weeks. After peaking near $800 billion in market cap in January, the crypto market plunged by almost half. Since then, bitcoin and other digital currencies have been on a rollercoaster ride. Some of the largest digital currencies are trading at their lowest prices in the last month, with investors worried that the crash will continue. But is it time to panic? Or are there good reasons why this might be a good thing for the long-term health of the market? Let’s take a look at some potential benefits of this crypto market crash and what it could mean for your investment strategy moving forward.
Why Did the Bitcoin Price Fall?
There are a number of reasons why bitcoin and other cryptocurrencies have taken a nose-dive over the last few months. The first is simply a case of mass over-investment. The bitcoin price rose rapidly to almost $20,000 in December due to the hype and excitement that followed the launch of bitcoin futures trading. Although the bitcoin price has been falling since the start of 2018, it has only recently begun to lose serious value due to the sheer volume of investors looking to cash out their bitcoin to cover other investment losses. Another reason for the slump is regulation. As more countries begin to recognize and regulate cryptocurrencies, the price is dropping due to the fact that fewer people are now able to invest in them. The third reason for the bitcoin crash is the fall in trading volume. As the price continues to fall, fewer people are trading the currency and trading volume has decreased by almost 50% in the last month.
More Investors Are Realizing Bitcoin Is Not the Only Game in Town
As the bitcoin crash continues, it is becoming increasingly clear that the cryptocurrency market is not as one-dimensional as some analysts initially thought. While bitcoin has traditionally been the most popular cryptocurrency, there are a number of other digital coins that are now proving themselves to be more resilient in this market crash. Ethereum, which is another popular cryptocurrency, has fallen in price since the start of the year but has since stabilized. Ripple’s price has fallen even further, but it is expected that the company’s new partnerships will bring it back up in the near future. Certain analysts have begun to realize that these alternative coins have a lot more to offer than bitcoin and are now recommending that investors switch their focus. As a number of cryptocurrencies rise in price, other investors are realizing that this market is more diverse than ever before.
Institutional Investments Will Lead to Long-Term Growth
Even if bitcoin and other cryptocurrencies continue to fall in price in the short-term, there is every chance that they will recover in the long-term. This is because institutions are now beginning to enter the cryptocurrency market in large numbers. Major banks such as Barclays, Goldman Sachs and JP Morgan have begun to offer cryptocurrency trading services. A number of high-profile investors have also begun to look at cryptocurrencies as a long-term investment opportunity. As more and more institutional investors enter the market, cryptocurrencies are likely to develop a strong, long-term growth pattern. If you are looking to invest in the cryptocurrency market, now may be a good time to consider taking a risk. If enough major investors join the market and institutions begin to offer cryptocurrency trading, the market will no doubt grow and flourish as a result.
Blockchain Is What’s Really Going to Benefit From This
Although the bitcoin price crash has caused significant anxiety among investors, it is important to remember that blockchain is the real game-changer in this market. Blockchain is the technology that powers the majority of cryptocurrencies. It is essentially a digital ledger that records all transactions on a shared network. The real value that these cryptocurrencies provide is the fact that they use blockchain technology to provide more secure and transparent financial transactions. While bitcoin investors may be feeling nervous at the moment, the technology that powers these financial transactions is actually likely to be the real winner in this market crash. As bitcoin and other cryptocurrencies fall in price, blockchain technology becomes cheaper and more accessible, which will only accelerate its adoption and implementation across industries. If you are looking to invest in this cryptocurrency market and are worried about the bitcoin crash, remember that blockchain is the real long-term benefit of this market.
The Bottom Line
The bitcoin crash has been an unsettling event for investors, but it is important to remember that the real value that these cryptocurrencies provide is in their technology. As this market continues to fall, blockchain will become cheaper and more accessible, which will help to accelerate its adoption across industries. If you are looking to invest in this market, now may be the perfect time to jump in.