Bitcoin , the most popular digital currency, is currently trading at $7,076 – down 7% in the last 24 hours and down 34.6% month-to-month. The second most popular cryptocurrency, Ethereum, has fallen much lower, to $398 in the last 24 hours and has lost more than half of its value (55.1%) since March 1. Other digital currencies have also seen similar declines.
One reason for the price drop may come from a set of bad news, mainly related to increased regulatory scrutiny of ICOs (initial coin offerings) and cryptocurrencies in most markets around the world. The fact that Facebook ,Google, and Twitter banned cryptocurrency-related ads on their platforms also didn’t help the situation. Other recent news, such as rumors of a new chip for Ethereum, as well as a major technical indicator called a “death cross” on Bitcoin charts, have certainly contributed to this decline.
There’s been some positive news in the crypto space, but none of it has been enough to reverse this downward trend. Recently, Morgan Stanley analysts said that Bitcoin could see a “strong rebound.” Money is still flowing into blockchain-related startups. And there’s exciting news on the development front for both Bitcoin and Ethereum, whose co-founder Vitalik Buterin recently proposed a new way to promote it, called Plasma Cash.
But if positive news isn’t enough, what will it take for digital currencies to gain a more solid footing? Most experts believe it’s just a matter of time. Similar situations of sudden rise and fall in value have been observed in the past, and digital currencies have faced more serious issues than the ones that have arisen recently.
ICO cooldown
Ethereum’s incredible 2017 boom was largely driven by initial coin offerings (ICOs) on its platform, but the excitement has waned. Just a few months ago, it was easy for a decent ICO to raise tens of millions. Now investors are rethinking that. The data doesn’t support it yet — CoinDesk’s ICO tracker shows only a small drop in ICO funding in January, and data for February isn’t yet available — but after three straight months of funding reaching $1.5 billion, it was time for a dip.
There is hope for a recovery on the horizon, however. Perhaps the massive ICOs of Telegram and Rakuten, scheduled for this year, will revive the ICO scene.
The main problem with estimating the price of cryptocurrencies like Bitcoin and Ethereum remains: These assets do not generate revenue and are therefore subject to price speculation, which often goes to extremes. Could Bitcoin one day become a global, cheap, widely supported currency and payment platform? Will the Ethereum company fulfill the vision of establishing a world computer? It is possible, but speculation is still far ahead of the technology. Investors who still hold on to their coins may find some solace in optimistic experts and in the fact that cryptocurrency always recovers after long periods of decline. However, there are never absolute guarantees.
