There are a range of reasons why the markets crash in January, and several originate in Asia in which the majority of crypto trading happens. Based on Coinmarketcap, that no longer includes South Korean exchanges, the entire market capitalization of cryptocurrencies dropped from $750 billion to $420 billion in four days. In the time of writing, they’ve recovered and are on the road back, now sitting in a total of $575 billion


Crash Catalysts

Reasons Why January's Price Slump is Nothing to Worry About

Reason #1: A good deal of the impetus to get crypto price activity comes from Asia in which the information hasn’t been great lately. China is continually attempting to quash the whole sector, and South Korea simply can not make up its mind with regulatory hype and clampdown fearmongering appearing on a nearly weekly basis. The FUD is as contagious as the FOMO, and fear selling within the last couple of days has shipped all coins to freefall, with a few losing up to 40%.

Looking back on historic Bitcoin graphs reveals a January selloff has occurred before, many times in fact. Bitcoin is the golden standard for crypto, and lots of the altcoins didn’t exist then.

Reason #2: It’s been theorized that one variable causing this is that the Chinese Lunar New Year, which generally falls in February. It’s a time of year when folks take time off work and traveling to go to the family, and for that, they’ll require fiat, not crypto. Since countries in Asia are responsible for the lion’s share of crypto trading, it stands to reason that this may donate to the yearly selloff.

Reason #3: Another factor might be the close of the tax season coming where shareholders intend to cover their yearly taxes. Again this needs to be carried out in fiat, not crypto. While not the sole catalyst, it might have some influence on price actions. .

Reason #4: The end of this first-ever Bitcoin futures contract might also have contributed to dealers shorting the advantage. When the large players, like CBOE and CME, get involved, smaller markets could be manipulated by the institutionalized investors, and we can see more of the activity until things stabilize.

Reason #5: As more new and inexperienced traders enter the marketplace, these graph oscillations will amplify. Just when they realize this really is a natural cycle and crypto isn’t dead will things settle down a bit. Since overall market investment in cryptocurrencies has soared over 2500 percent in under a year, We’re still at very early stages of what can be a match-changing sector.

Leave a Reply

Your email address will not be published. Required fields are marked *