Is Crypto Market a Bubble? Is the 2018 Sell Off a Sign that Cryptocurrency Market is a Bubble?

The fluctuations in the financial markets often confuse us. It is primarily a game of passing sentiments. In simple words, if a person is selling, there is someone who is buying it.

However, when panic strikes and a crash happens, there are no buyers and almost everyone wants to sell.

The trend begins when some investors dump assets at a high price and later spiral outward. Majority of the investors start selling purely as a panic reaction which further escalates the speed of price fall.

Hence, the entire set of developments lead to a selling pressure that leads to fission.

The 2018 Sell-Off in the Bitcoin Market

Quite opposite to what 2017 had in store for Bitcoin, the year 2018 saw drastically more sellers than buyers.

The different reactions during both these years are pure examples that reflect the psychology of the investors who were initially buying Bitcoin due to the speculation of a bull run.

Everyone anticipated that acquiring the digital asset will yield them higher returns in a short time period.

ICOs and Ethereum saw a similar bull run where investors were in a hurry to acquire the digital assets for some of these top cryptocurrencies.

However, in the year 2018, it was time to deliver. Not only Bitcoin tumbled, but there was a tough period for ICO. Ethereum had a difficult run as well with half of the blockchain projects started failing.

Bursting of the Crypto Bubble

People often termed this phase of declining prices as a phase when the bubble got busted. However, it doesn’t mean that bursting of a bubble translates into the death of an underlying asset.

The financial industry has loads of such examples where the traditional metrics had defined overvaluation of the markets leading to long term bearish correction. Some examples include the dot-com bubble which was pretty much similar to the crypto bubble that has recently been in the news.

When Will the Crypto Market Recover? 

Hence, it can be said that the declining prices and correction in the crypto markets was similar to any other financial markets. Instead of terming it as a bubble, it is a stage of correction. It is anticipated that by the end of 2019, all the crypto markets that include Bitcoin will start gaining momentum.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.