Disclaimer: the below is just a compilation of the different insights provided on recent market conditions. I suggest you each do hour own research, but here is the result of the last 48 hours of me doing some serious research. I know the recent severe drop in not only Bitcoin, but the entire cryptocurrency market has many concerned and worried about its future. Although it is very disheartening to look at current values, I've spent at least 10 hours the last few days looking at what the experts were saying and to filter through all the propaganda and FUD(fear, uncertainty, doubt) to give some good insight as to why the sudden crash. Three major situations seemed to have caused the dip, when then triggered a bigger dip. Here's my insight.
This dip is not the end of the world, but probably more of a buying opportunity if you read into patterns instead of the panic.
Every year it's returned higher.
"WHY THE DIP?
Reason 1:
Asia still dominates in crypto-trading by volume, accounting for the vast majority of money flowing in and out. Guess what is coming up in 3 weeks?Lunar New Year. Lots of money is flowing back to fiat to buy presents and plane/train tickets.
People spend a TON of money on travel and presents during Lunar New Year. This is their Christmas. This is also the largest mass migration of people on the planet, occurring over two weeks. Projections are for $100 billion USD in spending.
[https://www.forbes.com/sites/ywang/2017/01/26/worlds-largest-human-migration-begins-chinese-new-year-2017/#3a6d5502999a]
Remember that the crypto market is antithetical to the stock market. Stocks boom when business is booming during the holidays. Crypto investors are retail investors, not Wall Street investors. Retail investors sell during holidays, thus the crypto market falls.This selloff has happened exactly 3 weeks before Lunar New Year each of the last 4 years."
Evidence:
Reason 2:
Bulgaria early last year seized over 213,000 Bitcoins from a corruption crackdown worth about $500 million at the time. Mid-December, they reported it had a net value of over $3 billion, reported to be equal to one fifth of the country's debt. Transactions on the blockchain yesterday indicated as decline began due to Asia, they sold most if not all of it. Bitcoin is not as private as people think
https://www.rt.com/business/412700-bulgaria-shocked-bitcoin-piles/
Reason 3:
Simplest explanation is what we call FUD (fear, uncertainty, doubt) from reports of China and South Korea threatening to shut down Bitcoin exchanges and Bitcoin mining. The simple premise of cryptocurrency may meet resistance but is truly a push governments will have a hard time banning. That being said, FUD causes panic selling fearing a dip, therein causing a dip. Cryptocurrencies have been threatened at one point or another by nearly every country on the planet. Rarely does a government venture beyond rhetoric…Be they communist strongholds or liberal democracies, bitcoin cannot be stopped.
Reason 4(caused from reasons 1-3):
Many people with Bitcoin sitting on exchanges, had stop losses set at $12,000 and $10,000 to mitigate loss if Bitcoin crashed. The market conditions that caused it to dip below $12,000 triggered a sell off which caused a further dip to trigger a sell off when it hit $10,000.
I do feel that while current values are discouraging, it is merely temporary and we will be headed for a serious rebound.
If historical indicators are anything to go by, bitcoin will rally and finish the month higher than it began before going on to enjoy another bumper year. There may be more pain to endure though before the clouds lift and bitcoin can start eyeing another all-time high. Even if Bitcoin hits $6000 this year, it will also see $60,000. This volatility creates great opportunities if we seize it and don't panic. Cheers to 2018 as we're just getting started.