The first quarter of 2018 seems like a distant dream, with five-digit Bitcoin and record-breaking alt rallies. Part 1 of our 4-part 2018 crypto review looks back at January-March to see where this bear market began.
Bitcoin was at $13.5k, the crypto market was worth $600 billion and lambos were on order – yes, January 1, 2018 was a heady time. Every coin had hit or was about to hit all-time highs, regular Joes had become millionaires overnight and crypto was top billing on media outlets around the world.
December 2017 had belonged to Bitcoin, where it hit all-time highs of $20,000, but alts took over in January 2018. Most alts went on a rampage in the first half of the month, with some rising hundreds of percent. XRP in particular skyrocketed to $3.80, leading to some to claim, incorrectly, that Ripple Labs founder Chris Larsen had become the world’s richest man because of it. People all over the world were desperate to join the gold rush, causing popular exchanges such as Coinbase and Binance to close new registrations and only re-open sign-up processes in small windows. Even Mark Zuckerberg suggested that crypto would be his pet project of 2018. The only blot on the landscape during this time was the collapse of BitConnect, which took many life savings with it.
The second half of January brought the euphoria to a swift and ruthless end, setting the scene for the year ahead. The entire cryptocurrency market cap was cut almost in half in a ten-day bloodbath between the 7th and 17th, with Bitcoin shedding 40% of its value in that time. Given the nature of the average crypto investor, taking profits at the right time was not something they were prepared for, with the HODL meme holding strong and many expecting a rebound. Mainstream media was predicting the imminent popping of the bubble and reinforcing the speculative nature of cryptocurrencies, but many didn’t, or didn’t want to, believe it.
February saw some incredible price action, with Bitcoin crashing to the low $6,000s within the first week, decimating portfolios and shocking unseasoned investors. Alts fared even worse, with coins that had experienced the most incredible jumps the worst hit, such as Tron, which fell 91% within a month. The media reveled in the swift decline, but were made to eat their words when the price rebounded strongly, with Bitcoin doubling its price within two weeks. Investor hope was high that the price would return to the top, but veteran traders were already predicting an extended bear market.
February saw discussions on the viability of otherwise of stablecoin Tether begin to stir, with strong accusations that it was printing money it didn’t have and was therefore artificially propping up the price of Bitcoin. The discussions undoubtedly spooked the market and helped accelerate the drop, which they would do again throughout the year. February ended with Bitcoin around $10,000 and the market cap at around $450 billion, and there were still hopes it could fight off the drop and maintain those prices.
March was when the wheels really began to fall off. The price of Bitcoin fell steadily, losing 41% as the month rolled on, and the realization began to set in that the good times were probably over. The hype was dying down, the news cycle had by and large moved on and those who had bought at the top were left to pick up the pieces.
Now Bitcoin is again below $8K. Down 60% from its December peak. You HODLers : feel free to jump over the cliff to your financial meltdown…
— Nouriel Roubini (@Nouriel) March 15, 2018
Tech figureheads engaged in some verbal jousting on the subject of crypto with Bill Gates, going on record to state how cryptocurrencies had “caused deaths in a fairly direct way”, while Twitter CEO Jack Dorsey claimed that Bitcoin would be the sole world currency within ten years, although he also banned crypto advertising on the platform the same month. The CEO of a crypto investment app also claimed that 2018 would be the year that large investors would make “all hell break loose” in the crypto markets, with the aim of pushing the price down to a point that big money would be happy to enter. This would turn out to be a very prescient call.
Crypto 2018 Review Part 2 – the Wheels Fall Off