Bitcoin Crash: Putting the Downturn Into Perspective

Bitcoin Crash: Putting the Downturn Into Perspective

The acute bitcoin crash has spooked many in the cryptoeconomy. And things may get uglier yet. But calls of outright, permanent doom and gloom are likely overblown. Let’s examine the good, the bad, and the ugly. 

Also read: Bakkt Delays Launch As Crypto Markets Crash to New 2018 Lows

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Bitcoin Crash Permanent? Doubt It

Bitcoin’s latest price drop amid its ongoing 2018 slide means the OG cryptocurrency is now in the throes of one of its largest selloffs in its nearly 10-year history.

Bitcoin’s fresh decline coincided with selloffs this week both in international markets and in the U.S. stock market.

A flight from risk in general seems to be in play as some tech stocks have started to be routed and concerns over the possibility of a coming global recession grow.

Markets go up, and they go down. Still, critics like Nouriel Roubini have triumphantly hailed BTC’s newest downturn as proof that cryptocurrency’s jig is finally up.

But, as history has shown, bitcoin has seen such sharp declines before, and none have proved final yet.

This isn’t to say bitcoin will reach any particular price again, e.g. its high-point near $20,000 USD — it’s just the obvious suggestion that bitcoin has rebounded before and can still do so even if its price sinks further in the weeks ahead.

Bitcoin crash
Macro dynamics remain uncertain, even if Bitcoin’s technical roadmap is focused.

Is the cryptoeconomy’s longest and harshest bear market to date just beginning? It’s possible, particularly if a global recession is, in fact, nigh.

But while Roubini has argued the cryptoeconomy just went “bust for good,” it seems more likely that, like popular stock indices, bitcoin and other major digital assets will have boom-and-bust cycles for the remainder of their lives.

How long these cycles last, and how deep they go, are the grand questions accordingly. The verdict’s out for now, of course.

Perchance to Dream

Naturally, the hope of an eventual rebound from the current bitcoin crash has been pointed to by many cryptocurrency stalwarts over the past few days.

Some of these stalwarts have highlighted major historical drawbacks in Amazon’s and Apple’s stocks as an indication that the cryptoeconomy’s titans don’t have to be down for the count.

After last year’s hyperspeculative atmosphere and concerns over possible price manipulation, this year’s cryptoeconomy has seen considerable flight and that flight may not be over still.

It’s the dedicated, participatory builder types who will remain and trod ahead in the interim.

And when it comes to top-tier cryptocurrency projects like Bitcoin and Ethereum, their prices may attract investors, but its their fundamentals that make the curious stay.

And the fundamentals of the top projects are, indeed, more interesting than ever.

For example, the capacity of the Lightning Network was up around 250 percent from mid-October to mid-November 2018 alone. The fledgling layer-two scaling solution still has a long way to go, but it’s also come a long way and portends a possible revolutionary future for Bitcoin if brought to fruition.

The same goes generally for other notable projects like Ethereum. Ethereum’s developers are plugging along at their scaling triumvirate of Plasma, Casper, and sharding, and if actualized, this trinity should prove to be a gamechanger that leads to other gamechangers.

These are just two examples among many. Such tech is interesting and worth considering no matter where prices are at.

What’s your take? Will things get uglier before they get better amid this bitcoin crash? Or is Roubini right, is crypto never coming back from here? Let us know in the comments section below.


Images via Pixabay

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