Is the sun setting on cryptocurrencies?

Cryptocurrencies recently became a global phenomenon creating buzz across the globe. Last year, cryptocurrencies grabbed international headlines with their stellar performance generating substantial fortune for early investors. Bitcoin surged 1,370% in 2017 reaching record-breaking new highs. Well, the growth momentum is slowly grinding to a halt with some analysts asserting that the digital currency bubble has finally burst. Currently, it is correct to say that cryptocurrencies have seen better days.

Late 2017 saw the cryptocurrency momentum sustained due to rotation of funds, where money cashed out from one cryptocurrency was invested in another cryptocurrency thus bringing some form of equilibrium into the market. Cryptocurrencies are still rare explaining the spike in prices and their uptake is a bit slow. The odds, if all goes well and uptake surges, imply future gains for virtual currency owners. However, technical analysis alone is not sufficient when it comes to projecting the future of cryptocurrency markets.

The current sell-off of virtual currencies and the subsequent decline in prices has been prompted by bleak future prospects resulting from a crackdown on cryptocurrencies by official from countries that investors deem essential for the growth of digital currencies. Against this backdrop, the value of cryptocurrencies seems to have fallen of the cliff shedding off almost 50% in value.

The concept of rotation has been shunned as investors become less optimistic and uncertain after being spooked by the regulatory threats from essential markets such as China and South Korea. There are reports that the EU might follow Asia’s stance on cryptocurrencies and enact regulations to reign in on virtual currencies. Such crackdowns pose a major risk to the future of cryptocurrencies and future gains for investors.

In this case, money cashed out from cryptocurrencies is not invested in other cryptocurrencies. Rather, it is either invested in other assets or held in liquid form. This applies downward pressure on the prices of cryptocurrencies. The price of Bitcoin, Ethereum, Ripple and other cryptocurrencies has been plunging, sending investors into a panic, wiping billions of dollars from the cryptocurrencies market.

The meteoric rise in the price and popularity of bitcoin happened simultaneously with the continued growth and adoption of blockchain technology. Blockchain technology is the underlying technology behind cryptocurrencies. It was initially synonymous with Bitcoin before the emergence of other virtual currencies such as Ethereum and Ripple.

Virtual currencies have seen better days and uncertainity looms with reports that there might be concerted effort by governments to clamp down on the use of cryptocurrencies. Also, as technology continues to advance, there is the threat of an invasion in the blockchain system and the spread of sham coins.

Some leaders still remain buoyant stating that cryptocurrencies are here to stay due to their convenience and the added services they bring. Whether virtual currencies are here to stay or are a lucrative investment still remains debatable.

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