Some cryptocurrency traders are claiming cryptos have always fallen in January due to the Asian celebration of the Lunar New Year and they will bounce back shortly.
The claim, made on Reddit (posted below), is that Lunar New Year is a massive tourist holiday for an area of the world where much of the daily trading in Bitcoin and other altcoins happens.
Families have prioritised spending on gifts for this time and travel. Once the holiday season is over they will again spend their money on cryptocurrencies.
Experts blame regulation
The Reddit-posted claims fly in the face of mainstream commentary that the collapse of Bitcoin, Ethereum, Ripple, Litecoin and others stems from the threat of regulation, initially in South Korea and China.
This has been added to by sabre-rattling in France, Germany and the US, making international regulation of cryptocurrencies more likley. It is to be discussed at the next G20 meeting.
The combined market capitalisation of all cryptocurrencies has dropped more than $200bn since yesterday.
Chinese New Year
The Chinese New Year is widely reported as one of the biggest human migrations with an estimated 1.4 million Chinese on the move to visit families.
According to CNN: “In the seven days of the Lunar New Year, Chinese are expected to spend more than $100bn on eating and shopping (almost twice as much as Americans spend on Thanksgiving)”.
A look at the trading charts for Bitcoin in January for the past three years bears out the theory that there is always a major fall at this time of year.
- January 2015: BTC fell 46% (from $320 to $174).
- January 2016: BTC fell 16% (from $430 to $360) and fell 22% from its peak (from $460 to $360).
- January 2017: BTC fell 21% (from $959 to $758) and fell 36% from its peak (from $1182 to $758).
Each time it bounced back, at least partially, later in January and, as the year progressed, grew stronger than before. Here are the charts for January 2016, 2017 and so far in 2018:
Cryptocurrencies, Bitcoin, Ethereum, Ripple, Litecoin and many others have taken a huge pounding in the past few days with several at less than 50% of their peak prices.
Here's some recent stories:
- Bitcoin slumps down almost half its peak value
- Ripple plunges as cryto panic deepens
- Cryptocurrency sell-off continues on regulatory fears
- Cryptocurrencies all fall down
Read more: Cryptocurrencies all fall down | Capital.com
Read more: Cryptocurrency sell-off continues on regulatory fears | Capital.com
Read more: Ripple plunges as cryto panic deepens | Capital.com
But if the Reddit commentators are right, they could be at bargain basement prices and about to rise again.
NB: Capital.com did try to contact the Reddit poster but received no answer.