Fading in Bets: What Does It Mean?

Back in March, shortly after the world’s biggest crypto exchange, Binance, delisted the five traditional currencies that it supports – bitcoin, ether, litecoin, ripple, and stellar – and removed the option to buy them with fiat currency, the price of all of these currencies dropped by around 20%. Since then, the crypto markets have had a bit of a breather but are still down around 80% from their all-time highs. Even the more stable of the top 20 cryptos are trading at less than half of their value from early March. While no one yet knows what caused the initial price surge, the recent sell-off will certainly come as no surprise to anyone who has been tracking the industry for the past six months.

Binance’s Currency Delisting And The Implications For Other Exchanges

Binance’s willingness to delist five of its supported currencies comes as little surprise. Since the beginning of this year, the currency trading platform has been cutting ties with the traditional markets, partly in response to regulatory uncertainty and partly because it found traditional markets to be slow and inefficient compared to the crypto markets. Binance has also been removing fiat currency conversions in favor of its own cryptocurrency, Binance Coin, which is the only currency that customers on its platform can use to purchase goods and services. With Binance Coin now available for purchase on mainstream markets such as Coinbase and Gemini, it’s clear that the company is looking to reduce its reliance on the traditional financial system as much as possible.

What Does It Mean For Ethereum?

Ethereum has also taken a bit of a hit since Binance removed the currency conversions for bitcoin, ether, and litecoin in favor of its own cryptocurrency. In April, the price of the world’s second-largest cryptocurrency dropped from $323 to $237 and is currently trading around $280 per token, a drop of around 20% from its all-time high. While not all of this fall can be attributed to Binance, the world’s biggest cryptocurrency exchange, this is certainly one factor that can be. Just as Binance determined that the traditional markets were no longer a reliable place to buy currency, a similar determination can be made about Ethereum.

Ripple’s Price Dip Follows That Of The Other Cryptos

Another major factor in the recent declines in the price of bitcoin, ether, litecoin, and ripple is, in fact, their relative price comparisons to each other. Bitcoin, the original cryptocurrency, is currently trading at around $3,400 per coin, a far cry from its all-time high of almost $20,000 per coin. Ether, the cryptocurrency that represents access to the Ethereum network, is trading at around $215 per coin, a value that varies depending on the time of day and location of the trade (more in some places than in others). Similarly, the price of litecoin, the third-largest cryptocurrency by market capitalization, is around $200 per coin and that of ripple is around $0.50 per coin.

What’s interesting about all of this is that, even after Binance, Ripple, and other major crypto exchanges removed the ability to purchase their traditional currencies with fiat currency, and even after the plunge in the value of these cryptocurrencies, the demand for them has never been greater. Coinbase, one of the biggest and most popular cryptocurrency exchanges and one that also supports the traditional purchase of bitcoin, ether, and litecoin with fiat currency, has seen a massive influx of sign-ups in the past month and is currently dealing with a storage problem as a result. In an effort to prevent an over-inflation of its ledger, Coinbase is currently limiting its users to only $20 worth of Bitcoin per day. While this may be frustrating for those who have limited or no access to fiat currency, the increased demand, coupled with the recent cuts at major exchanges and the growing popularity of less-regulation friendly cryptocurrencies, make it clear that bitcoin’s value as a speculative investment is far from over.

Stablecoins As A Possible Answer?

Besides the major cryptocurrencies, most of the top 20 cryptos have seen a steady decline in value over the last six months as a result of increased volatility, coupled with reduced liquidity. This is, in part, why most of the top 20 cryptos are now considered to be ‘alt” cryptos, as their values tend to be more resistant to sharp declines in value and, as a result, are often viewed as more stable investment opportunities. Stablecoins, which are digital equivalents to traditional fiat currencies that offer price stability, are designed to reduce the volatility that plagues most cryptocurrencies. In general, the idea behind a stablecoin is to provide a safe place for people to store value in anticipation of a meltdown in the crypto markets. The most popular stablecoin, for example, is referred to as the dollar coin, or, simply, the dollar and is equivalent to the U.S. dollar in every way, except for the fact that it has a fixed price of one dollar. As with any new invention or idea, there are several different ways that the stablecoin concept can be implemented, but most of the existing stablecoins on the market are, in fact, just an IOU from one entity to another, like a banknote. Even the ones that are not banknotes are still, in essence, just a claim on a future transaction, as they are still only as good as someone believes they are when they are used to make a transaction. Most existing stablecoins are not backed by any tangible asset and there is no agreed-upon way to ensure that they will keep their stable value once issued. This is why existing stablecoins are referred to as ‘fiat” coins, as they are simply an IOU from one entity to another.

Why Are Traders Still Buying Bitcoin Even Though It’s Down 75% From Its All-Time High?

Aside from the general price decline of all the major cryptocurrencies, one factor that has shielded bitcoin from the true implications of its massive rally is, in fact, the actions of the individuals who entered the market at the right time and used the right strategy. The simple answer is that there are still people who believe that bitcoin, the original cryptocurrency, will always be worth something, even though it is down 75% from its all-time high. There is also still a significant number of people who believe that, one day, they will be able to sell their coins at a much higher price – possibly even enough to cover their initial capital investment – and, therefore, maintain their purchasing power. The fact that many people still cling to these beliefs makes bitcoin, at least as far as traders are concerned, a much more attractive investment opportunity than it would otherwise be. The same can be said, to a lesser extent, about the other major cryptocurrencies, as long as the right strategies are followed. Ether, the cryptocurrency that represents access to the Ethereum network, for example, is currently trading at around $215 per coin but is still up around 45% from its all-time low. This is mainly due to the fact that, even though it is a less-than-stellar time to be in the Ethereum market, precisely because there are so many projects on the network and so much activity as a result of the continuous maintenance required by all the different projects, Ethereum remains a viable option for any trader who is looking for a quick turnaround and stable value.

The Future Of Cryptocurrencies

Although it would be reasonable to assume, given the events that have taken place in the last six months, that the future of cryptocurrencies is now more uncertain than ever, in some ways, it is actually the opposite. While many cryptocurrencies have dropped in value as a direct result of the bear market, the demand for them has, in many cases, increased. The reason behind this is, in part, due to the fact that the major exchanges and the companies that rely on them for revenue find that a large number of crypto users come from outside their platforms. Just like any other digital commodity, the value of cryptocurrencies will continue to fluctuate based on supply and demand. The only difference is that, in the case of cryptocurrencies, the supply is always fixed and, in most cases, the demand is, in fact, growing exponentially. The future of cryptocurrencies is, in many ways, actually more promising than ever and it is, in fact, more stable than ever before. This is because there are now more alternatives to traditional markets than ever before and more people are exploring the vast, exciting world of cryptocurrencies than ever before. While the future is, in many ways, still mysterious, one thing is for sure – if you’re looking to place a bet, there are now more reliable and attractive opportunities within the cryptocurrency market than ever before.