Cryptocurrencies were skyrocketing in prices this time last year. Bitcoin was above 15000 dollars and Ethereum was above 700 dollars. Since then, prices have gone down to below 4000 dollars for Bitcoin and below 100 dollars for Ethereum. It has been a bear market for crypto. In fact, some would say that the bubble has burst as the market cap fell from a peak of over 800 billion dollars to around 100 billion dollars. Going into 2018, there was huge enthusiasm in the crypto space that 2018 would be a great year, but things didn’t go entirely as expected atleast in terms of prices, especially since regulators started to crack down on cryptocurrencies. One after the other, things began to hit the market. Scams, hacks, crackdown, and controversies have led to a prolonged bear market. Here are a few of the big headlines that happened in the past year.
The Kobayashi Incident
The dive in the price of bitcoin started with the liquidation of assets related to the Mt.Gox bankruptcy. The Bitcoin exchange, Mt.Gox, went bankrupt in 2014 due to multiple security breaches. Between December 2017 and January 2018, Nobuaki Kobayashi, the primary trustee of Mt.Gox, sold an undisclosed amount of Bitcoin and Bitcoin Cash. It is strongly believed that this event yielded a strong impact on the price dive.
A report said that this event of selling Bitcoins in large number led to the price being dropped as far as to $6,000 for 2018. Although the trustee’s actions were to credit funds for customers who lost theirs in the Mt.Gox’s hack in 2014, it became less pronounced once bitcoin’s price started to fall.
Ever since then, Bitcoin never really recovered the lost value. Other currencies witnessed the same trend with prices being low consistently from then on.
Coincheck Hack
This year, there was a large scale hack on cryptocurrency exchange Coincheck Inc. 523 million NEM coins worth $534 million approximately were stolen in the attack. Coincheck’s hack was bigger than Mt.Gox’s that happened in 2014, giving it the reputation of ‘biggest theft in the history of the world’. Many were quick to criticize the exchange for the lack of security measures and its use of hot wallets. This event created a sudden panic among users about the safety of the exchanges. Despite the hack, the NEM user community remained stable and the market held up strongly.
Regulatory crackdown
Crackdowns on cryptocurrencies during 2018 were unprecedented. Once the money started flowing in, regulators began to take notice. The level of crackdowns has been different in different countries. China outright banned ICOs and went after miners. The South Korean government prohibited the use of anonymous accounts in cryptocurrency trading, and also banned local financial institutes from hosting trades of Bitcoin Futures. India banned holding and trading of any crypto asset and further banned banks from doing business with companies involved in crypto. In the United States, a legal battle over ICO’s status as a security has brought confusion among the investors. Progress has been made, especially in Thailand and Japan where the markets are highly regulated but dealing with crypto and ICOs are legal. Hopefully, next year more countries will follow suit.
Hacks in South Korea
Even though the main networks have never been compromised, hackers still have hacked billions of dollars worth of cryptocurrencies from exchanges as well as users. One of the most heavily affected areas of the globe is South Korea, and North Korea is rumored to be behind most of these attacks. Coinrail and Bithumb, two South Korean exchanges, together lost over $71 million. Last year, Youbit, a notable exchange, was hacked resulting in the loss of bitcoins worth 73 million dollars forcing the company to file for bankruptcy in December. North Korea is profiting from these hacks in a big way reportedly. Recently, the strategy has shifted from attacking large institution to individual users due to the increased security at exchanges
Expectations for 2019
Going into the new year, all hope seems to be lost, but many feel the worst part is over and good times lie ahead. In fact, during all this turmoil, the number of crypto users have doubled in 2018 while more and more companies are looking to adopt crypto solutions for their problems. Many predict the markets will recover in 2019 and cryptocurrencies will regain some of its lost value. Mainstream adoption is atleast a few years away from now, but the current interest in crypto is long-term considering a year back when it was purely speculative. Right now, 2019 seems dull with not much excitement but crypto markets have never ceased to surprise.
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