3 reasons why Bitcoin and the aggregate crypto markets have just crashed again
3 reasons why Bitcoin and the aggregate crypto markets have just crashed again
Global crypto capital has lost another $ 7 billion today as Bitcoin and the Altcoin market continue to struggle for support. Here you can read why this is happening right now.
Bitcoin is the main trading pair with any other cryptocurrency or token on most major exchanges. As Bitcoin’s price goes up, most other coins and tokens go up, sometimes even more than Bitcoin itself.
The same also applies if the price of Bitcoin drops. Traders love this volatility – but smaller investors who try to time the market often lose out.
Here are 3 main reasons why the crypto market is in its recent doldrums despite the hype surrounding the upcoming halving of Bitcoin. Let’s take a look at that.
1. The Chinese New Year is coming
The Chinese New Year begins in two days, and all of China celebrates with great effort. This year will be the year of the rat. China is one of the largest crypto markets in the world – even though crypto trading is prohibited inside China.
However, many Chinese traders have managed to continue trading on the South Korean and Japanese crypto markets in order to circumvent the domestic ban.
Arthur Hayes of Bitmex, the Bitcoin exchange with the largest trading volume, predicted that we will see a sharp decline in Bitcoin price and trading volume when the Chinese New Year begins.
This is due to the influence of Chinese traders who take a few days off to celebrate the New Year. Bitcoin prices have dropped 2.6% in the last 24 hours, and there are still two days to go before the celebrations begin. If this year is in any way comparable to previous years, its forecast could be correct.
2. February is historically always bearish for the crypto markets
1) June and July likely to be +
a) could be longest + streak ever
2) August right around the corner
3) August typically bad, *AND* coincides with end of streak
4) Most other #cryptos follow $BTC pic.twitter.com/4wHaCmHl8T— Timothy Peterson (@nsquaredcrypto) June 19, 2019
Bitcoin has only been around for about eleven years, but we can analyze existing market data to predict the yearly cycle. Traditionally, the first quarter for Bitcoin has always been in decline.
Since Bitcoin is the first crypto asset and market leader, every second coin correlates strongly with it. Since almost every second crypto coin is traded against Bitcoin on every major exchange, they are strongly influenced by price changes, both positive and negative.
That means: if we have an event that causes a price drop (such as the upcoming Chinese New Year), then many altcoins will experience a larger drop compared to bitcoin.
Many expect that the upcoming halving of the newly produced bitcoins will ultimately lead to a price increase. However, this is usually a delayed phenomenon that only really increases prices when the growing scarcity becomes noticeable months later, as the reduced supply becomes clearer.
3. Bitcoin is currently heavily accumulated
Our new report "Bitcoin in Heavy Accumulation" is out. Read here: https://t.co/DkjedcF3RG pic.twitter.com/UpQotZUTdW
— Tuur Demeester (@TuurDemeester) April 18, 2019
Analysts Tuur Demeester from Adamant Capital and Willy Woo from Adaptive Capital both insist that Bitcoin is currently in a strong accumulation phase with institutional investors.
They argue convincingly that hedge funds and Bitcoin whales use walls to keep Bitcoin’s price within an $ 6,000- $ 8,000 USD range. So they hope to get as much Bitcoin exposure as possible before the halving takes place in May.
If the first two Bitcoin successes are an indicator, then we should see a massive price increase as soon as the additional shortage of a reduced block reward for miners increases the price pressure on the existing Bitcoin offer.
After the last cut in half, we saw Bitcoin rise to the all-time high of $ 19,891. Many Bitcoin investors believe that the upcoming halving will have a similar impact on the price.
