By Laura K. Inamedinova
October 27th, 2018

Halloween special: moments when crypto rose from the dead

Crypto is surely a gripping thing in business. First of all, it revealed a number of new exciting opportunities for beginner entrepreneurs and people who had not faced fintech before. Secondly, it is hard to predict – on one hand, this feature is terrible due to the risks investors and founders are facing. Nevertheless, good things come to those who wait and the history of crypto can prove this point perfectly well. During recent years, a few interesting moments in the positive fluctuation of cryptocurrencies were captured. In some sense, this phenomenon could be considered as a shift from a (relative) Halloween nightmare to a Christmas miracle.

Moment number 1: several years of waiting

The conception of Bitcoin became popular and visible in 2013, less than a decade since it was started to produce. Back then, this sector lacked even the most basic regulations, but it did not prevent the curiosity of investors: the banking crisis in Cyprus was probably the essential event which encouraged the wider use of newborn digital currencies. However, this success was significant yet did not last quite long, especially comparing with the scale reached by the later crypto development. In 2014, the price of Bitcoin decreased by more than 50% throughout a year and the rising cryptomania was eventually calmed down.

And then 2017 came over. The discussion about crypto became more and more usual and as a consequence, the popularity of ICO projects had significantly grown. There were several reasons for a new kick start: for example, some believe that there were many investors who decided to hold their digital assets instead of selling them and it increased the price of cryptocurrencies. Secondly, with the growth of financial technologies, people are becoming more and more interested in disruptive investments. As a result, crypto and ICOs received a lot of attention along with the emerging technology of Blockchain.

It is difficult to name the exact determinants of crypto success in the first half of 2017. However, nobody could deny that the growing interest of people became the essential contributor considering the bubble.

Bitcoin price in 2013, source: https://www.bbc.co.uk/news/magazine-25332746

Moment number 2: getting over rants of finance giants

Shortly after the beginning of cryptomania in 2017, this phenomenon received much negative coverage from financial institutions, including both public and private bodies. First of all, the government of China banned ICOs and exchange activities in the beginning of September 2017, thus provoking the decrease of 35% in the price of Bitcoin. The strict reaction of this fast-growing economy was a bit unexpected, since China was one of the most passionate countries considering the use of digital currencies. Slightly afterwards, Jamie Dimon publicly claimed that Bitcoin is a fraud and the consequences might be worse than the aftermaths of infamous tulip bulbs boom. After these words said by the CEO of JP Morgan, one of the most influential investment banks worldwide, the price of Bitcoin dropped again. Fun fact: in summer 2018, JP Morgan was in the spotlight again, as they expressed the idea of releasing ICO Tokens.

The later rebirth of cryptocurrencies may remind a beautiful love story for some; meanwhile, others saw it as a sign of upcoming collapse of digital currencies. The price of Bitcoin grew steadily up until mid-December, reaching almost 20,000 US dollars. These months can be seen as a crucial base for the development of ICO culture: the awareness of investors and teams became much larger. As a result, the quality and reliability of projects significantly increased in comparison with previous tries.

Jamie Dimon on cryptocurrencies, source: https://news.bitcoin.com/jp-morgan-chase-eats-humble-pie-applies-for-blockchain-patent/
Reactions towards the changing view of JP Morgan. Source: https://news.bitcoin.com/jp-morgan-chase-eats-humble-pie-applies-for-blockchain-patent/

Moment number 3: bursting bubbles and potential comeback

So far, 2018 marks a critical point in the history of cryptocurrencies. In other words, the phrase ‘go hard or go home’ is good enough to summarize what has been going on so far. The year began with a shocking decrease of Bitcoin price when its value was cut by more than 50% in around 6 weeks, reaching less than 10,000 US Dollars per unit. Furthermore, the price of Bitcoin reached the critical level in summer. Both in June and in August it dropped below 6,000 US Dollars per unit, encouraging talks about the end of the era. For instance, Jeff deGraaf, the prominent analyst of Wall Street claimed that it was highly likely to see ‘game over’ for Bitcoin.

However, time is passing by and it would not be faulty to tell that the market of cryptocurrencies demonstrates the signs of recovery. One of the latest examples of it could be the increase of BitcoinCash in the end of September. Also, some prominent experts from major financial institutions, such as former macro hedge fund manager Michael Novogratz or the managing partner of FundStrat Tom Lee are sure that cryptocurrencies are fully able to bounce back. Their reasoning is based on estimations towards the absolute bottom of prices; moreover, the situation in markets shows that investors are still keen on acquiring digital forms of currency.

The Internet reacts to the drop of Bitcoin in 2018, source: https://cryptonews.com/exclusives/your-batch-of-memes-and-jokes-delivered-weekly-2176.htm

It is still hard to claim whether cryptocurrencies and their projects are able to survive or not. The nature of these assets is slightly too complicated to predict any exact outcomes. However, for now it seems that crypto is almost bulletproof: although the price range flew up and down, this asset is not forgotten at all; non-stopping coverage of both mainstream media and still-going popularity of various niche outlets perfectly summarize it. Therefore, it would be reasonable to ask, what is coming next? What type of developments the industry is going to present? Exciting times are coming, for sure.