I woke up this morning to an ambush of text messages and alerts on my phone.
“China bans crypto, the end is near.”
“Is crypto, like… dead-dead?”
“I took out a loan to buy some Tron. How do I get a refund?”
For many of the individuals new to the crypto industry, the last few days might seem like Armageddon. Crypto coins falling out of the sky; howls of DOGE beyond the horizon.
For the seasoned vets out there, this is just another “correction” or bump in the road. Yeah, their portfolio might have taken a dip, but this is all part of the journey to building out the future of blockchain technology.
So who is right? Are we headed down a dark narrow path of no return, or is this simply a paper cut along the path to lambos and luxury. Let’s take a look.
2017 History of Crashes
To truly answer this question, I think we need to better define what a “crash” is. If we define a crash as any sudden dip in the market, we see “crashes” nearly every few weeks in crypto. There is a very thin line between a crash and a correction; all revolving around timing and continuity. I think the question we are really asking in these times; “Is this downward trend going to end, and if so, how long is it going to take to recover?”
The cryptosphere has seen its series of ups-and-downs in the last 10 years. To give true perspective of on where we currently stand in a macro view, I broke down 2017 week-by-week to look for similar trends and “crashes” along the way. Here were the results.
January 5-12, 2017
On January 5th of last year, the market started a 31% down trend from 21B to 14.5B. This seven day skid took 25 days to regain its 90% of its previous market cap and 42 days to get back to its previous all-time high.
May 24-27, 2017
On May 24th, the market started a 36% plunge from 91B to 68B. This three day skid took six days to get back to its previous all-time high.
September 8-15, 2017
On September 8th, the market started a 39% drop from 164.5B to 100B. This seven day skid took 27 days to get back to its previous all-time high.
December 21-22, 2017
On December 21st, the market took a quick 35% dive from 647B to 423B. This one day turn took six days to get back to its previous all time high.
Since January 8th, we have seen the market decrease by 36%.
Harness the Fear
Fear, uncertainty, and doubt (commonly labelled as FUD), is used a bit of an insult in the crypto community. Any time someone brings up even a small bit of information that the market might be a bit overvalued, they are HODL’d to death with memes and gifs of demise. While fear is definitely something that can hold us back from our true potential, we must also respect its purpose of protection.
Fear is what kept us from jumping off that two story building in 2nd grade because we were dared to do so. Fear is what kept our ancestors away from predators because, you know, they might eat us. Fear, inherently, is not a bad thing. It is when fear becomes illogical that we begin to restrict the opportunity ahead.
To truly answer the question, “are we in a crash or a correction”, you need to take a deep look into the mirror and figure out what you believe in. Is there opportunity ahead? Is blockchain technology truly revolutionary or just over-hyped jargon. Is the world going to have universal currency or will we stay the same?
I can’t answer these questions for you. But, if you take the time to figure out these answers for yourself, you will sleep much better at night knowing if you believe we are crashing, or simply going for a stroll.