So we have all seen the insane price rises and drops of CryptoCurrencies over the years, but I have to admit, what we have been witnessing this year is nothing short of scary.

Source Flickr Gidzy

I really feel for the people who have invested a lot of money into it, hard earned savings at the peak, expecting the trend to continue, and losing it all. That must be hard on the families.

What has been causing the massive drops in prices

I have a few explanations as to why this is the case that the price on everything is in the red.

1. The Addition of CFD's (Contracts for Difference)

Since the addition of CFD's to CryptoCurrency, it has become much like the Wild West. An unregulated, uncontrollable environment where deceitful tactics are manipulating the market, making the rich, richer.

Ultra High Level Explanation of a CFD

Think of a Stock, where you hold it, its yours, and you can buy and sell it.

Well a CFD is where you don't own a stock, but instead you are gambling. You place a bet for X of whatever you are staking against. Then you state whether the price is going to rise or fall. If you say its going to rise, then whatever the price it rises by, multiplied by the amount of shares you are staking against it, minus fees, when selling is the amount you can make. Its a highly risky endeavour.

Pair this with whales manipulating the market with massive buy or sell orders, where they may also have a CFD pegged against the CryptoCurrency, and they can make money two fold, then buy the coin again when its cheap and ride the wave all over. Its barbaric.

2. We have reached oversaturation

This one is pretty self-explanatory. There are now so many "CryptoCurrencies" out there, all trying to compete for their slice of the pie, that people are losing interest, or just not sure what to invest in anymore.

3. The hype has evened out

The prices that we have seen in the past could also be the peak of the hype, and the actual value of the CryptoCurrencies is the going rate for it, based on its actual tangible worth. Where prior, hype could have driven the prices through the roof.

I see a Sea of Red

Source Flikr Rob Ellis Photography

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