Crypto Crash: Bitcoin Sliding; Beginning of the End or a Test for Hodlers?
Bitcoin is down, the whole market looks red at the moment, there are talks of a possiblecrypto trading ban in South Koreaand China isn’t making things any easier with reports of a possiblecrackdown on all trading activitybarring OTC and P2P exchanges.
Bitcoin’s price went under $12,000 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.
Why is Bitcoin, and the market crashing?
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.
What should you be doing in a market like this?
Firstly, this is not investment advice, any one putting money into crypto should be doing their own research and taking responsibility for the profits and the losses. That being said, times like this are when you have to make a choice.
If you entered crypto for the money, you can look at your own financials and decide whether you can afford to stay in and risk a bigger drop or cash out and live with it. But if you believe in certain projects, whether it is Ethereum, NEO, or Bitcoin, markets like these present opportunities to accumulate tokens which have long-term potential and the best probabilities of providing real-world utility.
Almost everything ‘looks’ cheap right now, but you might also want to compare the USD price of a token with its BTC price to get an accurate picture. An example of this is NEO, which is killing it right now in USD value, but has just managed to breakthrough its BTC price all-time-high from August 2017.
At the end of the day, it really does come down to your own research and belief in the crypto space. If you think it’s a fad and bought Bitcoin at $20,000 in December, you’re probably very worried with your investment being almost