The cryptocurrency market has lost over $100 billion dollars overnight and Bitcoin (BTC) and many altcoins have lost close to 40% in value. Many new cryptocurrency investors have begun to panic and are frantically searching for an explanation. The chart below depicts a trending sell off the past four years around the ramp up to the Chinese New Year.
Asia is still dominant in cryptocurrency trading by volume, accounting for a large majority of money flowing in and out of the market. The Lunar New Year rings in exactly a months time, which starts on February 16th a few weeks behind its start dates from last year. It is estimated that over 3 billion trips are made to mainland China for the celebration. This is the largest migration of people on the planet and it occurs every year. China treats Chinese New Year, similar to how the United States treats Christmas.
With all this said, the cryptocurrency market is directly opposite of the stock market. The stock market booms when businesses do well around the holiday season and it tends to be the opposite in the crypto market. As there was an influx of investors after the American Thanksgiving, there was a correction and “crash” of the market just before the American Christmas time. Cryptocurrency investors are retail investors and they tend to sell during the holidays when they need to spend money on travel expenses and gifts.
In addition to the ramp of the Chinese New Year, it was reported yesterday by Bloomberg that China will begin targeting mobile applications and websites that offer cryptocurrency exchange services. Last year, it banned Initial Coin Offerings (ICOs) and the government warned cryptocurrency exchanges to stop trading cryptocurrencies, all in hopes to lower the risks of its volatile financial system. In addition to that, the Government has taken a firm stance on Bitcoin mining which was once the largest in the world.
The Chinese Government’s firm stance on Bitcoin mining stems from the electricity shortages the country faces, along with criminal activity in its financial sectors. In addition to the Chinese issues, last week South Korean authorities declared that they would take action on anonymous cryptocurrency trades and would take action on anonymous exchanges.
With the number of Asian cryptocurrency investors in the market, the uncertainty of two major cryptocurrency trading countries has affected the market a substantial amount this last week. Correction is inevitable but many individuals might just buy cryptocurrency as presents for their loved ones, as news begins to clear up on government regulations. I’ve said this before and I’ll say it again, the cryptocurrency market isn’t for the weak. If you truly believe in the project you invested in, close your wallets and stop checking the market every day. Blockchain technology is the future and its growth is inevitable, including the cryptocurrencies that run on the blockchain.
Featured Image: dawn.com