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The Valuation of Crypto Market Drops Alongside Bitcoin

Last week, crypto market saw a total valuation of $300 billion whereas in a matter of days it has dropped to a shocking $250 billion this week. In this big valuation drop, bitcoin also had a role to play, which was dropping by approximately 2.5%, as per CoinMarketCap.

Within a matter of hours, Bitcoin has fell below the mark of $7,000. Last week, bitcoin saw its price values in the range of $8,000 and since then it has been a downward hill for this particular cryptocurrency.

In the previous week, bitcoin saw its volume cruising along the lines of $5.5 billion while the entire market was at a volume of around $18 billion. And today, bitcoin volume remains below $4.2 billion while the market also faces a further decline in its volume. Currently, Bitcoin stays at a disappointing $6900 range.

The volatility of the crypto market cannot be denied. No matter how much benefits this technology provides, its volatility still remains an issue at large. All the institutions willing to invest in this market are held back by the volatility this market possesses. No one wants to invest money in something that does not guarantee any security. This recent trend shown by bitcoin and the crypto market as a whole is just another show of the volatility this market possesses.

The volatile trend shown by bitcoin is evident from its performance in 2018. Within a year bitcoin has dropped to almost half of its peak value at the start of the year. The downward trend faced by bitcoin since the start of the year is expected to continue for the near future as predicted by some of the experts.

Robert Sluymer, a financial expert in the world of cryptocurrency predicted that if bitcoin does not hold its value at $7,400 then it is expected to drop even further down. Since the mark has already been passed by the bitcoin it is expected to go down from here for some time. The range predicted by Sluymer to which it will fall has already been attained by bitcoin.

I look here thinking this is where it’s got to stick, this is where you can put the long trade on. But it has to be done with very tight stops because if bitcoin cannot dig in here, then that short-term trend defined by the 15-day moving average begins to roll over and I think it’s vulnerable to a collapse into that $6,000 range.

It is also predicted by the strategists at Goldman Sachs in their midyear economic outlook report that bitcoin is still going to drift further down. As stated by Sharmin Mossavar-Rahmani,:

Our view that cryptocurrencies would not retain value in their current incarnation remains intact and, in fact, has been borne out much sooner than we expected,

In the report published by Goldman Sachs, it is mentioned that as cryptocurrency does not fulfill the traditional roles performed by currencies so they are in for a further decline. Not being conventional makes it difficult for the cryptocurrencies to make their place. It is predicted in the report that crypto market is still going to face a further decline.

We expect further declines in the future given our view that these cryptocurrencies do not fulfill any of the three traditional roles of a currency: they are neither a medium of exchange, nor a unit of measurement, nor a store of value.

Although this downward trend is going to continue for some time now, but the situation is expected to get better in the near future. The era we are seeing is the most positive era for the crypto market as of yet because developments are being made to make it more stable and secure. Developments are being made in the department of security and regulations at a very fast pace. The demands for establishing a bitcoin exchange traded-fund (ETF) are sky high with more and more institutional interest piling up. The need for a regulatory framework to be deployed upon the market is also growing up day by day. If these demands get realized, the cryptocurrency market is expected to boom.

ETF will attract the majority of institutional investors holding their investments back from the crypto market owing to all the insecurity it possesses. Once money starts flowing in the market it is expected to grow bigger, and become more stable. Regulatory framework will prevent investors from probable scams. With illegal and fraudulent activities mitigated, the market is expected to improve in terms of valuation.

Although bitcoin and the crypto market are facing a serious drought, but things seem to be better for the market in the near future as predicted by some experts. As stated by Ran Neu-Ner, a well-renowned financial analyst in the world of cryptocurrency:

I think 2018 is the year where the mechanisms to allow retail consumers to get into cryptocurrencies start to open themselves up. The price will become more stable.

It is even predicted by the experts that bitcoin might see its value going past $20,000 by the end of this year. Alexis Ohanian, the VC of Initialized Capital and co-founder of Reddit even predicted that bitcoin will cross the mark of $20,000 by the end of this year.

I think 2018 is the year where the mechanisms to allow retail consumers to get into cryptocurrencies start to open themselves up. The price will become more stable.

Despite the volatility that the crypto market is facing, Alexis sees the bitcoin value going up in the coming future.

As volatile as it’s been, we see it continuing [to go] up over the long term, because more and more people are going to look for alternatives to fiat as a store of value as we see currency fluctuations with states failing and other uncertainty, that makes having a digital store of value like bitcoin something that’s desirable, because you don’t have to worry about withdrawing it from a bank or the value disappearing as a government money.

Bitcoin has had quite a bit of battle-testing over the years, and it’s certainly the most robust [cryptocurrency], and certainly one of the best proofs of crypto being a store of value.

All in all, bitcoin and the crypto market might be facing a severe downward trend for some time, but as further developments are made, the situation is expected to improve for bitcoin and the cryptocurrency market as whole in terms of overall valuation.

Ahsan Khalid

Blockchain Developer. An Electrical Engineer with majors in software development. I present forward my insight regarding the latest happenings of the blockchain world. All views on my articles are my own. Email: ahsan@blockpublisher.com or editor.news@blockpublisher.com

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