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Why this bitcoin crash is different than in 2018

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Cryptocurrencies have been having a hard time in recent months. In total, approximately $2 trillion in market value has evaporated from the peak market. In addition, bitcoin (BTC) has also fallen by about 70% since that all time high in November 2021 of $69,000. This decline also means that the term ‘crypto winter’ has again been widely used by analysts in the sector, as we saw after the crash of 2018.

This bitcoin crash is different than before

However, this time’s crash is different from the one from 2018. This time there are a number of things from the outside that have a lot of influence on the prices within the cryptocurrency sector.

The 2018 crash was caused by something that happened in the industry itself. In the bull market of 2017, the initial coin offerings (ICO) has become extremely popular. This caused a huge number of projects to be announced and everyone wanted to invest in them. In the end, many of these project turned out to be scams or never got off the ground.

“The 2017 crash was largely due to the bursting of a hype bubble,” Clara Medalie, research director at crypto data firm Kaiko, said in an interview. with CNBC†

The current crash, on the other hand, has been caused by macroeconomic factors such as soaring inflation and changing interest rates. These factors played no role in the 2018 crash.

The end of this crash in sight?

It is not yet clear when the market will calm down again or even rise. However, analysts believe that even more pain will flow into the market and that certain crypto companies will face even more difficult times.

According to James Butterfill, head of research at CoinShares, crypto exchanges and miners will be the next to struggle.

“We have a feeling this pain will spill over into the busy exchange industry,” Butterfill said. “Since it’s such a busy market and exchanges depend to some extent on economies of scale, the current environment is likely to take even more casualties.”

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