Cryptocurrencies, with the exception of very few, are now in a decline in prices. But is everything so bad? Or could this price drop have a positive side? According to CoinMarketCap, out of the hundred most expensive cryptocurrencies, only five were able to avoid falling in value. There are many factors that could have contributed to this development.
South Korea, which accounts for 12% of the global cryptocurrency market, is now on the verge of introducing harsh measures to regulate crypto exchanges. Chinese tightening of laws regarding mining and initial coin offerings could have a very negative impact on the viability of the market. French Finance Minister Bruno Le Maire recently joined his German and Italian counterparts in proposing to “discuss Bitcoin” at the next G20 meeting in April. Yesterday, the Minister of Finance announced the creation of a working group whose purpose will be to develop regulatory rules for cryptocurrencies. The group will be led by Jean-Pierre Landau, known for his criticism of Bitcoin.
But is everything so bad?
Periods of decline in some cases are a healthy way to rid the market of short-term “bubbles” and tokens that have no value. The blockchain market, after a sharp rise in popularity, has become overloaded with new projects with dubious prospects, projects without significant advantages over others and a small client base. Back in December 2017, when the market valuation exceeded $500 billion, Etherium creator Vitalik Buterin asked the question: “Do we deserve this?” And also: “How many decentralized applications have been created? How many unbanked people can use cryptocurrencies?”
Most bubble projects will most likely simply disappear. But what replaces them will be much more valuable and useful for society, because new altcoins will have to work hard to compete with existing cryptocurrencies, because such a stir around digital currencies and blockchain is unlikely to happen again.
You also need to remember that the cryptocurrency market has already experienced several serious price adjustments once before. The adjustment could also give investors time to rethink their strategies. Moreover, for experienced investors, falling prices are an excellent opportunity to buy assets. For others, this will be a great reminder that sometimes it's important to ignore the hype.
Therefore, although the fall in prices in January 2018 was an unpleasant surprise for investors, it can bring a lot of benefits in the future.
According to https://www.ccn.com
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