The global crypto market capital has shed another $7 billion today, as Bitcoin and the wider altcoin market continue to struggle to find support. Weâ€™re here to explain why this is happening right now.
Bitcoin is the main trading pair with every other cryptocurrency or token on most major exchanges. If Bitcoinâ€™s price rises, most other coins and tokens also rise, sometimes even outperforming Bitcoin itself in price action. The same is also true if Bitcoinâ€™s price declines. Traders love this volatility, but smaller investors trying to time the market often get wiped out.
Here are 3 major reasons for why the crypto market has been in itâ€™s recent slump, despite the hype surrounding Bitcoinâ€™s upcoming halving. Letâ€™s take a look.
1. Chinese New Year is right around the corner
In two days, Chinese New year kicks off, and all of China celebrates in a big way. This year will be the year of the rat. China is one of the largest crypto markets on the planet despite crypto trading being banned within China. Many Chinese traders have managed to continue trading in S. Korean and Japanese crypto markets to get around the ban domestically.
Arthur Hayes of Bitmex, the largest volume Bitcoin exchange, has predicted that we will see a large decline in Bitcoin price and trading volume, as Chinese New Year celebrations kick-off. This is from the impact of Chinese traders taking a few days away from crypto to celebrate the new year. In the last 24 hours bitcoin is already down 2.6% and we still are two days away from the commencement of celebrations. If this year is anything like prior years, his forecast might be spot on.
2. February is historically bearish for crypto markets
1) June and July likely to be + a) could be longest + streak ever2) August right around the corner3) August typically bad, *AND* coincides with end of streak4) Most other #cryptos follow $BTC pic.twitter.com/4wHaCmHl8T
â€” Timothy Peterson (@nsquaredcrypto) June 19, 2019
Bitcoin has only been around 11 years, but we can still analyze existing market data to forecast itâ€™s yearly cycle. Traditionally, the first quarter has always been bearish for Bitcoin. Since Bitcoin is the original crypto asset and market leader, every other coin is highly correlated to it. Since almost every other crypto is traded against Bitcoin on every major exchange, they tend to be deeply impacted by shifts in price, both positive and negative.
This means that if we have an event which causes a price decline (like many speculate the upcoming Chinese New Year to bring), then many Altcoins will suffer a greater decline in comparison to Bitcoin. Many expect the upcoming halving of new Bitcoins produced to cause prices to rise eventually, but it is usually a delayed phenomenon that doesnâ€™t actually cause prices to rise until the increased scarcity is felt months later, as the decreased supply makes itself more apparent.
3. Bitcoin is in heavy accumulation
Our new report “Bitcoin in Heavy Accumulation” is out. Read here: https://t.co/DkjedcF3RG pic.twitter.com/UpQotZUTdW
â€” Tuur Demeester (@TuurDemeester) April 18, 2019
Analysts Tuur Demeester of Adamant Capital and Willy Woo of Adaptive Capital have both insisted that Bitcoin is currently in heavy accumulation by institutional investors. They each make a convincing case for hedge funds and Bitcoin Whales using sell walls to keep Bitcoinâ€™s price within an accumulation range $6000-$8000 USD to get as much Bitcoin exposure as possible before the halving takes place in May.
If the first two Bitcoin havings are any indicator, we should see a massive rise in price once the added scarcity of a reduced block reward for miners puts price pressure on existing Bitcoin supply. After the last halving, we saw Bitcoin rise to the all-time high of $19, 891 dollars. Many Bitcoin investors believe that the upcoming halving will have a similar effect on price.
Why do you think the market has been in a slump? Let us know in the comments!
Images via Shutterstock, Twitter @TuurDemeester @NSquaredCrypto The post appeared first on Bitcoinist.com.