Concerns about the survival of the Cryptocurrencies industry.

Cryptocurrencies had the best year in 2017. Their prices rose by more than 1000% and at their peak in early January, the combined market valuation of the cryptocurrencies was more than $800 billion. Today, this market capitalization has fallen to about $200 billion and there are concerns about the survival of the industry.

The massive selloff this year has been caused by several factors. First, the people who bought the currencies a year ago exited their trades, taking their profits. Second, the regulatory talk has been a key contributor to the price decline. Early in the year, major regulators in Japan, South Korea, and China moved to regulate the industry. In these countries, the Initial Coin Offerings (ICOs) have been banned and in some, mining is under review. Third, the anticipated demand of the cryptocurrencies has not been there. As the year ended, Bitcoin futures were listed in the CBOE and the CME. Traders expected this to increase demand as large institutional investors moved into the space. Instead of buying, these companies shorted Bitcoin adding more pressure to its price.

There are concerns about the future of Bitcoin and other cryptocurrencies. Bitcoin was established almost ten years ago to help people make transactions in a cheaper and faster way.  As things stand now, these issues have been debunked. Making a Bitcoin transaction takes more time than the fiat currencies, the cost of mining the currency is at times higher than the currency itself, and the number of hackings have increased. In addition, Bitcoin has not been accepted by major retailers who fear its volatility. In fact, it is very difficult to find a major corporation that accepts cryptocurrencies.

Bitcoin proponents have also suggested that Bitcoin could be seen as a digital gold. Gold, as you know is a metal that is used as a store of value. Holders of gold believe that if there is a major crisis and the dollar collapses, their gold holdings will be more valuable. This is true about gold. However, seeing bitcoin as a digital form of gold is misguided. This is because in case of a major global disruption, Bitcoin is the last thing you want to hold.

It is unlikely that Bitcoin will gain mass acceptance mostly because of the reasons I have explained. Other cryptocurrencies that have been created are nothing but hoaxes, which means that they will collapse.

Therefore, at these prices, traders should not buy and hold cryptocurrencies. Instead, they could focus on trading them using platforms like easyMarkets. By being a cryptocurrencies trader, you will focus on identifying short-term trends and taking advantage of them.

For example, a few weeks ago, the price of Bitcoin rose after Blackrock announced that it will explore making Bitcoin investments. This was a good news for Bitcoin because Blackrock is the biggest money manager in the world. As such, even a tiny investment into cryptocurrencies could be seen as a bullish move. Good traders were however early to see that the bullishness would not hold and so, they placed sell orders when the price topped $8,500.

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