An insight into the recent cryptocurrency dip

By Dagunduro Emmanuel

Over the past few years since the public awareness of Bitcoin, and the first set of altcoins, investors have seen cryptocurrencies as a great investment tool. But just like the stock market and most investment, the crypto market has its period of dips and surges. The cryptocurrency market however has a lot of grey areas. The most important is that:
1. It is unregulated… There is no central body controlling the market.
2. Just like most markets, prices are determined by the forces of demand and supply.

Last year (2017) has been dubbed ‘the year of Cryptocurrencies’ as Bitcoin increased in value from $963 in January to over $19,000 in December of the same year. This exponential increase caused a high influx of investors in cryptocurrencies AND also an UNCONTROLLED increase in the number of coins in the market. Various groups launched their coins with different driving ideas to solve different problems.
Just like a company going public will have their IPO(Initial Public Offering) to generate money to fund their ideas and progress, founding groups of various cryptocurrencies came up with fund raising exercise called ICO (Initial Coin Offering); where intending investors who love or believe in their ideas exchange cash for the newly launched coins at a stipulated rate, just as you have in shares.
Now there’s one main downside. Some persons have come together to swindle the people in the name of Iron because there is no binding agreement or penalty for defaulting since the market is largely unregulated.This has therefore raised concerns among the governments of various countries, including Nigeria.

Also Wall Street, and other main financial institutions that felt threatened by the high flow of money into the cryptocurrencies have been devising means to fight the unregulated, decentralized crypto world. Counties like China, South Korea have been vocal about their skepticism of the whole cryptocurrency system. Banks in the U.K, U.S.A have also put restrictions on the use of credit cards in Crypto deals. The Senate of the United States of America also started debating about the effects of crypto currencies, though talks have been positive..

As a trend over the past few years, the cryptocurrency market experiences a dip at the start of a new year. This is largely due to the migration of a large number of people for the Chinese new year, which usually falls between Late January and mid February of the Gregorian calendar. During this period, a lot of Chinese investors in cryptocurrencies sell their coins for cheap or little profit. The market then steadies itself after the Chinese new year celebration and the increase continues.

This year’s dip has however been alarming. Just as the growth in value of Bitcoin was last year. The number one coin has dropped from $19,000 per coin to $6000 sometime last week and around the $8000 mark as at the time I type this. This has had ripple effects on other coins as quite a number have nearly hit their ICO prices. The normal January dip, fight from government, established financial institutions, social media giant like Facebook and at times the convectional media has played a major role in this year’s dip.

A lot of people are panic-selling for the fear of losing all. Hence the sharp fall in prices. So, the current dip is beyond the normal January dip the system is used to. This is a case of an organized system of government and financial institutions fighting against a decentralized and disorganized structure.

Who will win?
Time will tell.

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