We were looking at $20000 internationally, while in some Indian exchanges a whopping 16 lakh INR for a piece of Bitcoin, and today we are looking at prices lesser than 5.5 lakh INR, or close to 8000 USD. Why did this happen? Has it happened in the past? Should I buy now or wait? Let’s get into it.
Why did this happen?
Many theories have been put forward for the recent decline in BTC prices, but none is alone responsible for the dump. Prices began falling in December and have been on a steady decline.
Dec 22, 2017 – BTC down to $14000
The first major crash recently that put a dent in the growth was observed on Dec 21-22 in 2017. After the news of the South Korean Exchange Youbit’s hack and later bankruptcy broke out. The prices roaming about in the 19000 USD range came staggering down to $14000 in just one day.
Dec 31, 2017 – BTC down to $12600
Markets did recover after the first fall upto 15500 USD, but it didn’t stay long as we witnessed another huge fall in the price on Dec 31st, 2017. The 32% drop in price in just 1 day was too hard to digest. No specific reason has been brought up for this fall, it could merely be the downtrend.
January 10, 2018 – BTC down to $11000 (from $17000 on January 7, 2018)
A global widespread fear of regulatory crackdown loomed after reports of ban of cryptocurrency from South Korea and China made headlines. While many paid no heeds to the rumours, the damage, as always, was done by the mainstream media reporting.
January 22, 2018 – BTC down to $10780 (from $12200 on January 21, 2018)
After the many reasons above we began believing that the BTC price is on a downtrend and it is only logical that prices go slightly down. What we couldn’t fathom though was these prices falling within 24 hours. We did do our analysis about the price drop ahead of Chinese New Year, bitcoin prices had been falling every January since 2015. But the Chinese New year in 2018 is on 16th Feb 2018. Are we in for further price decline? We will talk about that in a few moments.
February 02, 2018 – BTC down to $8000
Once again, for India atleast, we blame the mainstream media. After the Union Budget speech by Finance Minister Arun Jaitley, media houses were quick to put out news like “Bitcoin deemed Illegal”, ” Bitcoin to be banned” and so on. While the truth was Arun Jaitley never said Bitcoin was going to be banned, he only said Bitcoin or cryptocurrency will not be considered legal tender and that government will take measures to curb the illegal activities taking place using cryptocurrency.
Another theory put forward for the decline is the news coming from Japan. After reporting a hack of $500 Million worth of NEM tokens, Japanese exchange Coincheck had some unwanted visitors. The Japanese Authorities raided the exchange to investigate the matter more closely. The exchange did say they will be returning 90% of the customers funds after the biggest hack in the history of Crypto, but well, a hack this big can scare traders.
I don’t want to debate on whether this was the only cause, or whether Indian market can have an influence on the international market, but what I understand is that when prices are on a decline, one negative news can actually cause many to fled the field.
Has it happened in the past?
Well, it might look scary now because we are talking about Bitcoin prices in thousands of US dollars and lakhs of INR, but this has happened in the past. I came across this chart on one of the telegram groups I follow:
I want to reiterate that the chart has been shared quite a lot of times and hence we are unable to determine the original source.
If I were trading in Bitcoin back in August 2012 and had seen the price go from $16 to $7 in one day, I’d be scared to death. However, at this point I can only believe that like any other market, even BTC is experiencing a correction.
Should you Buy BTC now?
This is entirely a personal choice but let me put a few facts below to help you decide:
- The BTC price drops every year in January were a few days ahead of Chinese New Year. This year the Chinese New Year is on Feb 16.
- Regulators across the world are becoming increasingly worried about Cryptocurrency and it is expected to be a key discussion at the G20 Summit in Argentina on March 20th.
- More and more people are becoming aware of Cryptocurrency and are investing. The applications of blockchain has increased as well. Even the Indian government is considering the use of Blockchain. So it is unlikely that Bitcoin will go away.
The best advice on investment that anyone gave me was “Never invest the whole amount on one coin or in one go”. I follow this now. You should too. See the trend. Follow experience traders. Follow some technical analysis (Although I don’t believe in it, I don’t advice against it). After you are sure, invest a little amount at fluctuations on either side.
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