On June 15, 2017, the digital currency market underwent a significant market correction, with the value of a number of top currencies declining quickly and substantially. Bitcoin, Ethereum, and Ripple all dropped in value by 13-17% in a single day, with other currencies seeing even larger losses on a similar time scale. The drop in value coincided with an overall decline in market capitalization by around $16 billion. This came shortly after the cryptocurrency market had achieved a significant milestone by extending beyond $100 billion in market cap. What was behind the significant losses on June 15? And why might this matter for the long-term health of the blossoming industry?
Actually a Return to More Sustainable Levels?
In a report by Coin Telegraph, Andreas Antonopoulos, a Bitcoin expert, suggested that those questioning the sharp fall in price among cryptocurrencies like Bitcoin should also consider the recent price movements in the other direction. After several weeks of quick gains, during which Bitcoin achieved a record $3000 price per coin, Antonopoulos believes that the market correction is in fact just that: a movement toward a more sustainable price level after a period of too-rapid growth. In hindsight, he feels, Bitcoin, Ethereum, and other currencies were gaining in value at levels that were outsized and unsustainable. Along with ICOs and increasing hype by the wider media, the risk of a cryptocurrency bubble was climbing. "We're returning to more sustainable price levels for all cryptos. In the process of reverting to the long term trendline, we will undershoot," Antonopoulos explained.
Big Fall After Big Gains
The fall on June 15 does seem to have countered weeks of unbelievable gains. Bitcoin climbed by nearly 200% since the beginning of the year, achieving an all-time high of $3018 just days before the fall to $2300. A market correction after a new all-time high is nothing new for Bitcoin. In fact, this is the pattern that the currency has seen each time it achieves a new record. However, the currency has always seemed to rebound to even higher peaks. This could be thanks to widespread media coverage, a rapidly growing base of users, and a general trend toward new interest among hedge funds and banks.
The question remains what will happen with Bitcoin, Ethereum, and other cryptocurrencies in the near future. On one hand, if past trends continue, Bitcoin may be primed for new price heights. With a fierce battle raging over Bitcoin's future and the currencies ongoing problems with scaling, however, this may be a time when Ethereum or another currency finally catches up with the largest player in the growing field. Or, as some analysts have suggested, perhaps cryptocurrencies are indeed within a bubble, and it's only a matter of time before it bursts.