If I was doing a Youtube video, I’d be sitting here with a sad face looking at the camera and saying “Hey there, let’s talk about how much my portfolio is down”. But I have to keep my emotions in check before writing an article. A big disclaimer to share today is that none of what you read here should be taken as a Financial advise. Crypto is risky so be careful out there.
Why is Bitcoin Falling?
Bitcoin prices have been slumping hard since a few days and touched a 50 day low today by breaking below $7000 or less than 4.75 lacs INR in India considering a little premium we have here.
There are many theories for this drop around the world wide web and we thought we’d share some with you.
1. The Dark and Confusing Cloud of Regulations
Bitcoin and other cryptocurrencies have remained in the bearish trend for the entire 2018. Keeping aside the technical analysis for a bit and asking some experts about Why Bitcoin is falling, and they will tell you “Regulations”. An air of confusion looms over the regulation of cryptocurrencies. India has setup a committee to form guidelines around the subject. There have been bans and lifting on bans in South Korea and China. The G20 has pushed regulations to July 2018. Hence, overall there have not been many good news for crypto.
Watch the below video from Ian Balina who expects a multi year bear market over regulations mystery.
2. Media FUD
Remember that headline “Bitcoin could reach $2800” or “Bitcoin Bubble Bursts” or “It is the end of Bitcoin”. Let’s face it, many of us consume mainstream media news for our daily updates. Ever since Bitcoin became a topic of interest, these media houses have been Bearish-to say the least about Bitcoin.
Just look at this video from CNBC which says Bitcoin plunged 40% after Twitter announced ban on Crypto ads. In reality Bitcoin plunged 40% from January and twitter announced the ban on March 26th.
3. Speculations of Cartels manipulating the Prices
A little far fetched theory but Early February a Medium Post, came out with a theory that cartels have entered the Bitcoin market since Oct-2017 and they are the ones slowly selling off Bitcoins to keep the price down.
The post has been regularly updated and is even blaming the OKEX fiasco on Cartel that took place today. More on that later.
According to the writer, every time there seems to be a rise in prices, huge volumes of Bitcoins are dumped to keep them down. Slowly bringing the MA down.
4. The Death Cross
Oh the dreaded Death Cross. A Death Cross is when the 50 day moving average price goes below a 200 day moving average price. Bitcoin is reaching that point. CNBC is predicting $5850 as of today while the same channel earlier on March 23rd predicted the price can drop to $2800.
On other hand, Bitcoin is not new to Death Cross pattern. The last time it came close to a Death cross was in Sep-2015 when the prices slumped to $236. However BTC recovered from there to gain on to $500 in November of the same year.
5. OKEx Bitcoin Futures Fiasco
Earlier today between 3:00 am and 5:30 am IST, HongKong based OKEx exchange users started posting screengrabs on Twitter hinting that Bitcoin futures prices went down to as low as $4755, marking an over 20% difference with then price of BTC around $7000.
The exchange has given a clarification and will be cancelling the irregular transactions.
“OKEx always has the customers’ best interests at heart, and we are dedicated to providing the best products and technologies to protect our customers. Transactions were suspended for several hours due to the incident. Please accept our sincere apologies for the inconvenience caused,” the platform’s team wrote in its notice.
6. Lower Acceptance and Large Speculation
This one possibly is the most truthful answer to why Bitcoin is falling. For any asset’s value to increase, the asset’s acceptance has to increase. Bitcoin went mainstream near the end of 2017 when speculations for the currency was on the rise.
Bitcoin can be used as a medium of exchange or a store of value. It can be used to transfer money from anywhere to anywhere within a few minutes and for a fraction of the cost you might incur if you transfer via banks. But, Bitcoin is not the only one. There are 1500 cryptocurrencies in the world and many of them are purely for the purpose of transfer of money. Be it Digibyte (DGB), Ripple (XRP), DASH and so on.
Only a handful of currencies like Ethereum (ETH) serve a different purpose by giving the ability to build something over the blockchain. The market is largely running on speculations as the technological innovations are in pipeline. There haven’t been positive news to sway the sentiment in the opposite direction.
7. Honourable Mentions:
There are many factors that might have lead to the eventual fall in the Bitcoin prices, maybe not hugely significant but they did play a part:
- Indian Media calling Cryptocurrency Illegal by misinterpreting Finance Minister’s Budget Speech
- Mt. Gox trustee selling off huge amounts of Bitcoins
- China’s Ban/Unban, Korea’s ban/unban
- Chinese New Year in January
- Multiple Exchanges getting hacked like CoinCheck, an attempt on Binance and so on
Will Bitcoin Prices go Up?
Some people are calling this a Bear trap, some are calling it a correction that will continue. Quite honestly at this point many people have been proven wrong and many have turned out to be right. Just do your own research.
As a generic rule, keep Stop losses. They can save you from massive losses. Don’t get too attached. If market is falling, get out at lower losses than higher losses. It is also not a bad idea to just take a break.
Let us know the comments below what are you doing with your investment right now.