Why cryptocurrencies are falling down so rapidly?

In the past cryptocurrency was the easiest and safest way to make money. The only thing you needed to do was to buy bitcoins and wait for the price to go up, or mine the cryptocurrency with a laptop. Plain and simple. Only few people took advantage from that because it was almost unknown. For years bitcoin grew exponentially without a significant loss, so the big promise was that the trend should continue without an end, making everybody rich to the eternity. When people started to think that, it was the beginning of the end. People started to buy bitcoin or other altcoins without any logic or strategy, with the false promise of becoming rich. This created a dramatic grow fo the market capital and volume.

When the capital was enough to make rich most of the people that years before invested on it, they started to sell, also because the risk of holding was too high. This created an incredible loss in the market capital against any optimistic forecast. However, this phenomenon is very common and it's known with the term of "consolidation". When the trend grow too much along the volume in a short period of time, the price is doomed to consolidate. As you can see on the above chart, the moment when bitcoin started to grow rapdly is when the mass media have spread the news that bitcoin exists and that it can be bought to become rich in short time. However, buying something when the price or the volume is so high is always a bad idea. People that bought bitcoin when it was $20,000, lost about half of the money in about 1 month. Another false promise is that bitcoin will grow again, reaching a quote of $500,000, making the investment still worth in a long-term. This could be false for different kind of reasons. Bitcoin has an old protocol that is already suffering of unconfirmed transactions because miners want to speculate on the transaction fees. Moreover, other altcoins like ethereum, ripple, dash, litecoin, status, eos and so on, are starting to consolidate in the same way.

That's  because bitcoin in the past was the first and only cryptocurrency, it was easy to mine and to buy. Few people got the biggest slice of the bitcoin market capital, so they can decide not only the future of this coin but of the other altcoins too. When the market is consolidated and not profitable, they can move to other altcoins making use of the exchange platforms.



So, not only they can cause the collapse of bitcoin but also the inflation of other altcoins and the future collapse of them, in an infinite loop of speculation. Just to make an example, if I had 10,000 bitcoins on March 2017, I could buy 5,000 btc ($5,500,000) of ripple, or 1,000,000,000 XRP, making in this moment $1.380.000.000, or better $3,270,000,000 when few weeks ago ripple was $3.27. When the movements stop being profitable, the capital can be converted into legal currency. The continuous escape of cryptocurrency makes the total market capital fall down, like shown in the above chart. The drop causes a consolidation of the whole cryptocurrency market. This is the reason why these days people are observing a drop of all the available cryptocurrencies. Because the total market is already consolidated. The consolidation will be followed by period of fluctuations around a certain value that can increment or decrease with a slower transitory. After a long period, the waves becomes smaller since the market exits from the consolidation status and it will continue to grow, but it can decrease with the same probability. So, in general, this is not a good period to buy cryptocurrency in general if you want to make a solid long-term investment, to see your value grow like in the old times of bitcoin: the toy is broken. Anyway you can use trading to make good speculation with the frequent fluctuations that are present during the consolidation period.