The year 2017 has been hailed as the breakout year for the cryptocurrency industry. It was during this time that most virtual currencies made a dent in the markets, and with the significant fall of previously dominant cryptocurrencies.
In 2017, it became clear that the crypto trade involves a good variety of digital currencies apart from the widely publicized Bitcoin.
Bitcoin, in itself, grew by a staggering 1,000% percent in the past year, yet it stands to be a low performer when compared to other forms of virtual money.
Cryptocurrency Rankings in Late-2017
Bitcoin did not even make it to the top 10 list of 2017 best-performing crypto assets, according to CryptoCompare. Instead, Ripple is considered as the 2017 winner for performance.
It was revered as the preferred cryptocurrency to be used in payment systems that typify banking institutions. Less familiar brands such as and also did exceptionally well.
Meanwhile, Bitcoin was ranked at position 14 of the world's best performing cryptocurrencies of 2017. Nonetheless, it still fared well when compared to its other counterparts.
This factor is specific to rival crypto assets that possess their blockchains, excluding those that were offered through initial coin offerings (ICOs) in the past year.
So far, 2018 has been accompanied by particular changes in cryptocurrency performance across the trading spectrum. Official data dating as recently as mid-January shows that the health of Ripple has been shaken.
This cryptocurrency, which was considered the most successful in the market, has experienced severe days. It lost as much as 19 billion USD on January 16 alone.
This is notwithstanding the fact that Ripple has exhibited a total improvement of about 38 percent so far.
Ethereum is another popular virtual currency alternative to Bitcoin.
It is regarded as the second most significant cryptocurrency in the world.
Still, this virtual currency has had a fair share of challenges, including a substantial drop in value. Nevertheless, the past month has been kind to Ethereum, which has improved by an impressive 22 percent.
NEO is undoubtedly the cryptocurrency to watch in 2018. It has maintained a 122 percent peak since December 2017.
NEO has been the most consistent cryptocurrency compared to other virtual coins in the market.
The Current Situation
Apart from NEO, every other cryptocurrency has suffered significant losses in the past few weeks. Many investors have cried foul over the hard fall taken by Bitcoin, Ethereum and Ripple.
In 2017 alone, the losses registered by the world's best performing cryptocurrencies have amounted to a sickening $100 billion (USD).
Bitcoin had recorded a significant drop in its value, which is considered to exhibit the broadest marginal losses in the crypto trade. Bitcoin prices fell by as much as 64 percent.
This phenomenon has produced dire effects on the cryptocurrency trading environment. A market cap was caused by Bitcoin losses, which brought the cryptocurrency market down to $70 billion.
About six months ago, Ethereum's price took a massive dip and stuck at $151 USD. This event happened in a short time-a month, precisely. The Ethereum drop took a heavy toll on investors who quickly became panicked.
They would then sell their coins to retrieve cash as a prophylactic measure to mitigate losses they anticipated for the future. Amateur investors seemed to experience difficulty in holding on to their coins at significantly low prices.
Currently, cryptocurrencies are still taking a beating from the forces of demand and supply. The past week has been pretty unsuccessful for them, with the plunging prices of virtual coins like Bitcoin down about 50 percent of its 2017 peak.
The fact that Bitcoin is currently painted as a failed giant is attributable to its media popularity-everyone seems to be talking about it.
Ethereum and Ripple have also taken a hit by registering losses that would shadow their 2017 values.
The January 16 collapse of Bitconnect also came as a shocker. Bitconnect was a crypto exchange that had once been implicated in financial crimes.
All these unfortunate events highlight the peculiar nature of the cryptocurrency trade. As volatile as it is, Bitcoin was a great performer throughout the majority of 2017. Nevertheless, this virtual coin has suffered serious crashes before.
It ranges from the losses encountered in the year 2011 to the value descent in November 2013.
What Is Causing This Fall?
The current cryptocurrency value plunge can be attributed to several important factors. The first and most important factor is the global pressure mounted on the crypto trade by governments around the world.
Conceivably, many nations have joined the worldwide movement to place strict regulations on the crypto trade. The proposed ban of cryptocurrencies by "crypto crazy" countries like South Korea has dramatically affected the health of the best performing cryptocurrencies in the world.
These regulations go a long way in influencing a massive shift of cryptocurrencies' value that has been seen to grip the first month of 2018.
Bitconnect's collapse has also been the product of this exodus that saw the exchange suffering warnings from U.S. financial authorities.
Previously, the cryptocurrency trade had enjoyed a prolonged era of minimal governmental interference on its operations. The Bitcoin boom benefited from events stemming from shrewd trading techniques.
And while 2017 was certainly the best year for Bitcoin, the New Year brought tragedy that would be engineered by a global crackdown on the sale of virtual coins in key markets.
The second reason is attributed to cash outs done by post ICO companies. Several blockchain startups around the world have managed to raise great amounts of money from Ethereum, despite lacking specific products offered by the organizations.
They have been cashing out through ICOs, and figures were running into millions of dollars raised through the Ethereum platform.
The reality is that most of these blockchain companies are largely overrated and are not worth the money they have gained through the crypto trade.
A good example is that of the ICO, which is said to have achieved a staggering $35 million USD in half a minute of trading.
made more than $16 million USD while , another company, garnered a staggering 153 million USD.
These companies have reaped significant benefits off their marketing skills and basic street wisdom.
But experts argue that the instability of low-key startups is not the order of established companies. Serious organizations tend to hold on to their coins for prolonged periods.
Startups that are out to make quick cash would very easily trade their Ethereum and affect the behavior of other entities in the crypto market.
It is a common phenomenon for reputable companies to respond to mass cashing out by liquidating their virtual coins and keeping their precious dollars in fiat. This is a defense mechanism against the high volatility of the cryptocurrency industry.
The recent cash outs have caused the overall Ethereum price significant market pressure.
A company like EOS, which raised more than $100 million USD in July 2017, is known to have been disposing its coins to Bitfinex.
Apart from EOS, TenX sold about 30 percent of its Ethereum in the same year.
It is, however, important to realize that particular details concerning the transactions are mostly unavailable. It cannot be clarified whether TenX traded their coins via a cryptocurrency exchange or they were sold directly to individuals.
Because several ICO project developers lack the intention to fulfilll their mandate reaping monetary benefits, financial markets should create mechanisms of regulating these behaviors and stop the multi-million dollar fund-seeking rings from crashing economies.
The arrangements must target functional business models, with an emphasis on clarifying organizational goals and ambitions. These factors would then be compared to the expected profits accumulated form startup project activities.
Additionally, amateur panicking and the manipulation of markets has caused the significant fall in the cryptocurrency value across global markets. While several governments have stepped in to regulate the crypto trade, cryptocurrencies are still widely unregulated because central banks do not control these assets.
Some nations are stricter on crypto markets, while others are lenient on the undertakings of the virtual coin trade. This observation has led to industry malpractices where vital industry players manipulate the crypto markets for their gain.
This is done with total disregard for the effects of their activities on the crypto trade. Additionally, amateurs are known to be unstable concerning their investment behaviors.
Their responses to the crypto market dynamics are usually sharp; amateur investors are typically quick to panic, selling whenever their favorite virtual coins take a small price dip.
To the experienced economist, one would argue that the plummeting of prices begets growth correction in the cryptocurrency market, which is good.
Amateurs and small-time startups, who form a significant bulk of the cryptocurrency investment portfolio, are bound to make quick and emotional decisions based on the current market hype.
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