Everything is red. All digital currencies are down. Some 20%, some 30%, but almost none is escaping the red, red Friday, started yesterday by Bitcoin which fell $500 in minutes. It then somewhat recovered, to crash down $1,000, from $2,800, now trading around $2,000.
Ethereum followed. The currency went down from a high of $217 to a low of $116 in just hours, to then somewhat recover, currently trading around a range of $158 on Coinbase.
The rest of the digital currencies are almost all down. Pick one, chances are it’s probably minus 20%, 30% or maybe even more, as the entire space loses $25 billion in just one day, down from a high of around $90 to now stand around $65 billion.
It is the biggest crash in monetary terms this space has ever seen. The combined market cap of all digital currencies was $20 billion just a month or two ago, now, they’ve lost more in just one day, but their combined market cap remains above that of many global companies, including multinational banks.
The reason for the crash is probably speculation. The market likely thought the hype level had reached a point where no buyers were left, so they turned to selling in a panic rush of who goes out first.
It is a repeated pattern of boom and bust applicable to bitcoin, ethereum, other digital currencies, but also stock markets, national economies and even global economies, although at different time frames but at similar proportional scales.
Bitcoin crashed in 2011 after reaching a high of $30, falling to as low as $2. Ethereum somewhat repeated that history last spring, falling from around $25 to a low of $5. In late 2012 and early 2013, bitcoin rose to a high of $266, to then come crashing down to a low of $50, hanging around $70 to $100 for some months before its big bubble in November 2013 which sent its price to a high of $1,000.
Ethereum might be repeating that this spring as it went from around $10 at the beginning of the year to a high of $217, to then come crashing down to $116, stabilizing around $150, but this is all currently developing.
Will eth repeat bitcoin’s history and rise to $1,000 after some weeks or months of cooling off? Who knows. What we do know is that this is the most exciting space to be in right now. Silicon Valley has become boring. Stocks are for grandpa now. In this space, we can dream of all sorts of industries being disrupted, all sorts of new business models, all sorts of projects.
Money is flowing even while this crashes because for eth it is probably very temporary. Nothing has changed in fundamentals for ethereum, nor really even on a psychological level because most probably don’t feel like it is a crash in the case of eth.
For bitcoin it is different, but for eth, it may well be the case this party has just started as the platform keeps adding new projects through token sales and private blockchains and even public blockchains.
That is, of course, just our opinion with no one really able to predict these sort of things, but if we are to work on probabilities this seems to us just a healthy correction as far as eth is concerned, and a needed cool down too.
How long that will last no one can say, but that eth will roar again probably few doubt in any serious way for the platform is just too advanced, its ecosystem far too big, its breadth far too wide and its awareness almost nonexistent.