2018 was a brutal year for the bitcoin price. Shortly after hitting an all-time high, the crypto bubble popped. Over the following twelve months, the bitcoin price slowly bled out to end the year on a low note.
Bitcoin began 2018 at $13,464 and ended the year at $3,742 – a 72% loss in value.
The total cryptocurrency market capitalization fell from $626.6 billion to $125.6 billion – an 80% drop.
How did bitcoin lose 72% in price?
To understand the phenomenal fall in price, we must go back to 2017 – a year of irrational exuberance and hype in the crypto space. Bitcoin became a mainstream talking point and hundreds of new cryptocurrencies emerged. “Initial coin offerings” promised easy returns.
But the mania quickly turned into anguish. As millions flooded to cryptocurrency, Bitcoin came up against severe scaling issues, hindering its adoption as a currency alternative.
And the reality of ICOs was laid bare. Most projects couldn’t possibly deliver on their wild promises. Many were nothing more than scams designed to part investors with their cash.
The subesequent 72% price crash in 2018 was the dose of reality.
Bitcoin price fall triggers layoffs across the industry
As the year progressed, blockchain and cryptocurrency firms began to announce layoffs. Many of these companies had raised money in crypto so the dramatic price falls tore away at their operating funds.
ConsenSys, a company that supports new projects on the Ethereum blockchain, announced a 50-60% staff cull. Steemit, a blogging platform powered by cryptocurrency, shed 70% of its staff.
In more high-profile layoffs, Bitmain -the world’s largest bitcoin mining company – is reportedly downsizing with up to 50% of staff members at risk. And cryptocurrency exchange Huobi is streamlining its team, although exact numbers are yet to be revealed.
This is the harsh reality of “crypto-winter.”
$1 billion crypto hacks
The discussion of cryptocurrency security reared its head again after the biggest exchange hack in history took place in January 2018. Coincheck was hacked to the tune of $532.6 million with further hacks at Bitgrail and Bithumb through the year.
The constant hacks weakened trust in the crypto exchange ecosystem and put further selling pressure on the bitcoin price.
Some progress is being made with a landmark move into crypto insurance from the Winklevoss Twins. All funds on their Gemini exchange and custody service are now fully insured.
Even traditional players are stepping into the ring as Fidelity announced a crypto custody service. Expect secure custody services, aka bitcoin banks, to develop at pace in 2019.
Bitcoin hits a regulatory brick wall
Cryptocurrency regulation continued to hinder progress throughout 2018.
The US Securities and Exchange Commission (SEC) took action against numerous ICOs. The SEC chairman concluded that “every ICO I’ve seen is a security,” which means stricter investor rules should be applied.
China maintained its ban on cryptocurrency exchanges, while South Korea authorities raided exchanges on suspicion of money laundering and tax evasion.
Most notably, the SEC rejected or pushed back at least nine bitcoin exchange-traded funds (ETFs). The inevitable launch of a bitcoin ETF is often cited as a major catalyst for the bitcoin price, but the continuous delays weighed on crypto prices throughout 2018.
Any good news for the bitcoin price?
There are plenty of potential price triggers to look forward to in 2019. The much-hyped Bakkt platform is expected in early 2019. Bakkt is a futures trading service settled in real bitcoin and is backed by ICE, the parent company of the New York Stock Exchange.
We will continue to see bitcoin ETF proposals thrown at the SEC. At least one SEC commissioner, Hester Peirce, is supportive of bitcoin and serious discussions are taking place. Expect this to dominate bitcoin conversation for the coming year.
Elsewhere, huge leaps are being made in cryptocurrency technology. The lightning network is rapidly gaining pace in a bid to facilitate micropayments for bitcoin. Blockstream’s satellites are now beaming the blockchain to every landmass on earth, eliminating the need for internet access for bitcoin transactions.
Ethereum and Ripple 2018 price roundup
Ethereum fared worse than bitcoin through 2018, falling 85%. ETH started the year at $880 and ended at $133.
Ripple XRP also fell 85%, starting the year at $2.31 and closing at $0.35.