Is Bitcoin Less Volatile Than Ever?
Bitcoin has had a controversial history and its rates have fluctuated wildly over the years. Bitcoin enjoyed years of relative stability prior to 2017 when what is called the '"Bitcoin bubble'" occurred. Its rates have fluctuated roughly between $500 to $1000 per Bitcoin.
The 2017 Bubble
It is difficult to fully explain the 2017 bubble as even top experts cannot fully explain the meteoric rise and crash of the value of Bitcoin. One can assume that the bubble was partially fueled by the rise of Ethereum and ERC20 ICOs or initial coin offerings.
In 2017 there were several majorly successful ICOs that managed to raise hundreds of millions in funding. One of the more successful ICOs was Bancor which offered a decentralized exchange of sorts. By using a liquidity pool and a price discovery algorithm, people could exchange different tokens with no need for human intervention or an orderbook. Bancor managed to raise $158 M in just one day.
There were several other wildly successful ICOs which managed to raise hundreds of millions in a short time frame to develop their project. This helped fuel the hype machine, made frontline news and increased public interest in cryptocurrencies.
Many followed suit and 2017-2018 was filled with ICOs trying to raise funds for their project or DApp (decentralized application). This was because fundraising was much quicker, and projects could raise larger amounts than standard tech start-ups with less of a solid business plan in mind.
While some attribute the crash to the lack of functionality of cryptocurrencies, the fall of ICOs might also be a major player. In December 2017 the U.S. Security Exchange Commission banned ICOs. According to the ban, only accredited investors in the United States could participate in ICOs. The ban along with many failed and/or fraudulent ICOs severely impacted the crypto markets.
Bitcoin tumbled from an all-time-high of just below $20,000 to $10,000 in February 2018 and later to roughly $4000 in November 2018. This crash has affected every cryptocurrency and brought down the market cap of all cryptocurrencies in general.
What Lays Ahead?
It seems that while there is still plenty of public interest in cryptocurrencies, the price of Bitcoin has remained very stable for the last 5 months. Its price has fluctuated just slightly between $4200 and $3500. This may be the most stable that Bitcoin's value has been in years. Some may say that this proves Bitcoin as a store of value, while others are expecting the next big rise in its price as more and more institutional investors adopt cryptocurrencies & blockchain technology.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado