-US BITCOIN CRASH: Explain why ? Don’t Panic In the early hours of morning, cryptocurrency traders awoke to a sea of red numbers with almost every single token in the top 100 reporting drops in value over the past 24 hours. The dips come after a number of announced legislative actions by national governments, although there is skepticism in the crypto community that these events are linked. Bitcoin’s price went under $11,000 today, matching December 5, 2017 levels, and the overall market cap for cryptocurrencies lost over $100 billion. If Bitcoin continues to slide and drop further, we may even find the next support around $8,000, so the picture isn’t very pretty right now. Bitcoin crash – Explain why ? Developments in South Korea and China have always had a huge impact on Bitcoin prices since these are two of the biggest cryptocurrency markets with Korean exchanges leading global trading volumes.
Since Bitcoin markets are the biggest, with all other currencies paired with BTC, a price drop for Bitcoin almost invariably results in an overall market decline. If Bitcoin trading is banned, it would take out a significant chunk of trading volume, resulting in an even bigger pull back. The price drops we are experiencing now are merely in anticipation of such a ban, as investors and traders sell to cut losses. If you look at CMC, Tether (USDT) is one of the handful of currencies up over the last 24 hours, and it indicates that a significant majority has sold their tokens for USDT. However, there is potentially another reason behind the current drop, which is not related to these developments. Chinese New Year is a Big Deal The Chinese New Year, or the Lunar New Year, is coming up on February 16, 2018, and just like Christmas in December resulted in a drop, the Lunar New Year also takes money out of the markets. The Lunar New Year is celebrated in a big way – people buy gifts and travel and around $100 billion is spent during this time.
Given how crypto markets have retail investors, it makes sense that such an event would result in people selling off for the short-term. Don’t Panic As much as I am super bullish on Bitcoin and crypto in general in the long term, I do also have short term fears about the market going into 2018. Here is why:
1. Bitcoin is up more than 1000% since start of January this year so far. As we have seen multiple times this year already, such gains do not come without corrections, FUD and drama. If Bitcoin goes to around 10k+ around end of this year, chances are we are in for another technical correction.
2. I believe going into Christmas and holiday period, many people want to get out of the market to relax more and forget about the extreme volatility and random panick attacks that come with investing in crypto. 3. CME Group futures is planned to go live 2nd week of December. This represents professional investors which have experience in volatile markets and know more about market psychology than any of us. If these people start shorting Bitcoin in late Dec / early Jan, what will happen…?
4. Just looking at the Bitcoin/USD chart the last 3 years, you will see that Bitcoin has corrected every year between 4th and 15th of January.
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