You probably woke up this morning to a portfolio streaked in red, and you likely came to the logical conclusion that the market is getting massacred at the moment. Congratulations, you’d be right. If you’re a veteran investor, this is par for the course, another…
You probably woke up this morning to a portfolio streaked in red, and you likely came to the logical conclusion that the market is getting massacred at the moment. Congratulations, you’d be right. If you’re a veteran investor, this is par for the course, another adrenaline-inducing day in this amusement park we call a market. If you’re new to the game, you might regret investing in that magic internet money your coworker used to pay off his mortgage. Either way, there’s little reason to panic, and there’s even less of a reason to be surprised.
Yesterday, the cryptocurrency market topped-off a few bucks shy of a $650bln total valuation. This all-time high had crypto’s market capitalization up from $250bln back in the 21st of November. That’s a 159% increase in only a month. To put this into perspective, the United State’s stock market took a full year to increase 8% in total market cap between 2015-2016.
This correction is long overdue. The market’s been riding on the back of a gold-studded bull for the past two months, so it’s only natural that a bear has snatched it up in its bloody clutches.
Besides, this bloodbath is nothing we haven’t seen before. Back in September, the crypto market fell into a bearish slump after a bullish frenzy in August. Bitcoin and Ethereum both lost around 40% and 50% of their respective values in two weeks, and Litecoin fell its own gut-punching loss of 50% over a matter of days. From these ashes, however, the market rose to the highs we just experienced. It wasn’t doomsday, just the fallout of a booming summer.
Granted, this blindside correction has Bitcoin down nearly 50% from 5 days ago, an unfortunate departure from its all-time high of $20k. But the healthier the prosperity, the harsher the correction, especially at a time when institutional adoption is on the rise. In December alone, we’ve seen the inauguration of Bitcoin futures, doors open for cryptocurrency ETFs, and policy makers scramble to accommodate crypto into formal regulation.
Bitcoin and friends’ gains over the past month have run alongside a triage of attention from global governments, the general public, and legacy financial institutions. The same factors that slung the market to the stratosphere are likely the same tethers dragging it back down to earth. But these catalysts of success and disaster, of investor ecstasy and despair, are the very stimulants that will sustain crypto in 2018 and the years to come.
Cryptocurrencies have too much momentum going into the new year for this to be its coup de grâce. Let alone Bitcoin’s attraction as a financial assets, but many platforms and currencies are pioneering enterprise solutions that businesses have started to adopt. Blockchain adoption is waiting patiently on the international stage’s doorstep, and come 2018, a slew of mainnet and product launches will only push crypto further into the public and corporate folds.
If you just bought in at an all-time high, my sympathies, friend. It’s a tough first correction to stomach, and so far, it’s been a long way down. But don’t fill those sell orders just yet. This bubble’s got plenty of room left to grow before it grows anywhere close to the $2.9 trillion burst that crashed the dot.com craze.
So stop refreshing your portfolio, make a cup of hot cocoa–hell, add some peppermint schnapps if you need to–and go enjoy your holiday. The market may continue bleeding yet, but once the scrapes and bruises heal, it’ll come back stronger than before. Just hunker down, relax, hold, and we’ll see you in 2018.
Image from Shutterstock.
Last modified: January 24, 2020 11:20 PM UTC