Crypto News & ICO Reviews
Once again we awake to a sea of red in crypto land. It has become quite a familiar sight this year with only a few days showing the potential for a rebound. It hasn’t happened and Bitcoin continues to tumble pulling all of its brethren down with it.
Crypto space isn’t the only place in pain though; stock markets across the world have taken a beating this week also so how do we really define a ‘crash’?
According to Fortune the Dow Jones Industrial Average fell over a thousand points for the first time ever yesterday. Only two stocks in the S&P 500 were up for the day, while all of the Dow’s 30 members fell. Both indexes have erased all of their gains for the year. Sound familiar?
Bitcoin battered but not as badly
Monday was a bleak day for Bitcoin also which, at the time of writing, has lost over 20% in the past 24 hours according to Coinmarketcap. BTC has fallen from around $8,300 yesterday morning to $6,500 during today’s Asian trading session. This equates to a loss of around $30 billion from its market capacity.
Compare this to Dow stocks which lost $300 billion over the weekend and on Monday and it puts things into perspective somewhat. Just one stock, Google’s parent company Alphabet, lost $40 billion for the second day in a row so the mainstream media constantly sticking it to Bitcoin time and time again is quite unjustified when you look at the bigger picture.
Crashing the party
A market crash is generally defined by an abrupt and rapid decline of 20% or more. The 2008 Lehmann Brothers crash is a prime example. There have been others such incidents on stock markets such as the infamous 1929 Black Tuesday event, 1987’s Black Monday, and the dot com collapse in 2000. A market correction however is when the decline is at least 10% from its highs.
From its high of 26,600 on January 26 the Dow has corrected to 24,300 at the time of writing. This is only a change of 8.6%, so not quite crash material … yet.
Bitcoin has crashed, there is no doubting that. But when something goes up by 200% in one month alone it is totally unsustainable. In mid-November Bitcoin was trading at around $6,750 which is pretty close to its price today. All that has happened is that it has lost the gains it made in the past two months.
This is nothing new for Bitcoin, one of the biggest crashes it had was in spring 2013 when it fell over 70% from $233 to $67 virtually overnight. Then there was the Mt Gox hack in 2014 which caused another fall of 50% and took a year to recover, so Bitcoin is no stranger to volatility and crashes.
Those that usually lose out in these situations are the inexperienced traders that are in it for a quick buck and panic sell when too much mainstream media FUD overwhelms them. The crypto market cap is currently at $290 billion, this time last year it was under $20 billion so looking at the bigger picture the crypto industry is still up over 1350% year on year. Relax, it is all part of the nature of things in crypto land.