Another week, another dip for bitcoin.
In the last 24 hours bitcoin has dropped about $1500, and it has dropped about $2500 from it's highs of a few days ago.
This is coming on the heels of relief rally that saw the coin get near $12,800 after it's plunge all way down near $9,000 just a week ago.
(Source: https://www.coinbase.com/dashboard)
What is causing the drop?
It isn't entirely clear what is causing the drop, like is often the case with cryptocurrency price swings.
However, there are some likely potential possibilities that are contributing to the weakness...
For one, an analyst went on CNBC and claimed that he thinks bitcoin is going to lose 90% of it's value from current levels, this year.
He is calling for a drop down to $1,000-$3,000 by the end of this year.
Then of course every major news outlet is running with that headline which is only spreading fear among an alreadly visibly shaken investor base.
Then you have South Korea announcing that they will be taxing cryptocurrency exchanges.
Which shouldn't be that big of news by itself, because any company that is earning money has to pay taxes, but perhaps some of these exchanges are needing to lighten up their crypto inventories in order to spring for the cash needed to pay these taxes?
That is something that wouldn't surprise me one bit and something that is probably happening.
(Source: https://www.investors.com/news/bitcoin-renews-sell-off-as-south-korea-clamps-down/)
Another point to consider is the seasonality aspect.
I wrote a post on the seasonality aspect a few days back, it can be seen here:
Basically it underscores how the middle of the January has traditionally been a very weak point over the past 4 years, and then how the beginning of the year overall has been a weak point compared to the rest of the year.
That is not a lot of data to go off of, but it's enough to see a trend.
My thoughts:
I think overall, we are just in a very weak point in terms of seasonality, in terms of the price running up so much so fast, and the news turning decidedly bearish over the past few weeks, that it will be hard to gain any kind of upward momentum in the short term.
Given that environment, it doesn't take much to cause already jittery investors to hit the sell button.
However, I think a few weeks from now, perhaps a few months, prices will be higher than where we are today, across the board.
Stay informed my friends.
*Image courtesy of pixabay.com
Follow me: @jrcornel