Cryptocurrency speculators find themselves in an awkward position. All major currencies have lost a lot of value throughout 2018 despite a brief uptick in April. The ongoing declines for some holders convinced them to cash out their assets in quick succession. Coinbase is the primary exchange for this conversion at this time.
Cryptocurrency Woes Continue
December 2017 was an excellent time for cryptocurrency speculators. All currencies and tokens reached new all-time highs on a near-daily basis. Such momentum could not be maintained indefinitely. The crazy bull run spilled over to early January and quickly met its demise in February. Ever since, the markets have lost between 60% and 70% of their value, causing a fair bit of panic.
The idea of “holding and things will improve” is not that appealing these days. Especially to investors who bought cryptocurrency at the peak that will feel the burn right now. Diversification of any financial portfolio is critical. In the cryptocurrency world, all markets suffer from the current slump. As such, diversification isn’t providing any relief for speculators.
Confidence in the cryptocurrency industry is waning a bit. That is only normal during this extensive bearish pressure. Converting Bitcoin and altcoins to fiat currency became very appealing earlier this year. It appears a lot of speculators rely on Coinbase to do so. The company saw more money being withdrawn compared to deposited in April of 2018.
The Success of Coinbase Works Both Ways
The increase in withdrawals from Coinbase is not surprising. A trend has begun to form since December of 2017. Cashing out at the peak is always a favorable course of action. In the cryptocurrency world, timing that price action can be very tricky. Even selling now can be a wrong decision, depending on how the markets evolve.
That Coinbase trend has already begun to reverse a bit in May. Deposits were 10% higher compared to withdrawals for that month. It is a small recovery compared to the previous month, yet still a relatively positive sign. The current lack of overall cryptocurrency trading volume shows any conversion involving fiat currency isn’t a popular option this time around.
April was the first time that saw more money being taken out of Coinbase from users than being put in. This data was compiled by Chime, a startup that offers free checking. However, it should be noted that this data was taken from the activity of 500,000 users of Chime. By comparison, Coinbase has 20 million users. Still, this is a notable trend, which shows that many investors looking to score some quick bucks are likely getting out of the cryptocurrency space.
Volatility is the name of the game in the cryptocurrency industry. Bearish trends and bullish momentum occur virtually every year. This year has clearly been very bearish, yet there are still six months let in 2018. Future values of Bitcoin may go as high as $50,000 or even higher, according to some experts. Cashing out now equals missing out on potential profits. For users who poured life savings into Bitcoin, absorbing those losses may be the only recourse.
Do you think the cryptocurrency market will rebound by the end of 2018? Is it a good thing that get-rich-quick crypto investors are perhaps leaving the market? Let us know in the comments below.
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