Hello, today I will tell you why bitcoin falls down
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A huge breakdown is taking place on the cryptocurrency market. Bitcoin already costs nearly half of what in December. What caused declines? There may be several reasons.
Reason # 1: Bad news from South Korea
South Korea is a very important place in the world of cryptocurrencies, because it is one of the most active markets. For several days, the media reported that the Ministry of Justice was planning to ban cryptocurrencies in this country. It was said directly that the trade will be stopped and the largest stock exchanges were inspected by the tax office.
This was not good news for investors. For several days, however, the media heated up the topic, fueling the atmosphere of uncertainty.
Finally, it turned out that Korea would not ban virtual currency trading, but would only regulate the market. And there is nothing terrible in this.
Stock exchanges will have to verify the identity of users, because so far many people have traded in an anonymous way. Under the new guidelines, the stock exchanges will also have to prohibit the trade of minors and foreigners.
Verification on international and Polish stock exchanges is a standard. By registering for the largest of them, we must provide personal data, a document number that will be used for verification and send a photo of the ID / passport / driving license, and in many cases our photo, on which we hold this document and a card with the current date.
In this way, exchanges verify new users. There are many indications that from now on in South Korea similar rules will apply. For some, this may be an inconvenience, but for most investors, the introduction of verification is definitely a better solution than the total ban on cryptocurrencies, which Korea also considered.
Reason # 2: The specter of the ban on currency digging in China
Fossil cryptocurrencies are extracted by performing calculations. Calculations can be made even with a sheet of paper and a pencil, but this method is very, very, very slow and people using it can not count on a reasonable income. Therefore, excavators are used for calculations - specially prepared computer devices that use the processing power of processors and graphics cards. They need electricity for operation, and the cheaper the electricity, the more profitable it is to obtain currency.
China has a very cheap electricity, which is why they quickly became the main place where bitcoin mines were created. Currently, 65 percent. bitcoin transactions are confirmed in Chinese mines. Therefore, investors were scared of the information that the Chinese government is planning to prohibit currency digging in China.
Such a decision would mean that a huge part of the mine would have to be closed - permanently or temporarily, for the time of moving them to other parts of the world. Such an operation, however, is a huge logistic challenge, because the largest mines are large halls full of shelves, which bend under the pressure of working electronics. Mines are also suitable sources of power and the need to skilfully discharge heat. That's why new locations are often prepared for months.
If the Chinese suddenly caught the miners by their decision, it would be a black day for Bitcoin and other crypts. That's what investors are afraid of.
Reason # 3: Panic among novices
In 2017 bitcoin entered the mainstream, followed by other cryptocurrencies. The US market has opened up to virtual currencies so much that some Americans even pledged their homes to buy some bitcoins for the dollars they bought.
The inflow of inexperienced investors who believe in quick success and instant earnings means that there are many investments on the cryptocurrency market that are difficult to explain in a logical way. People buy currencies, behind which there are projects that are miserable copies of cryptocurrencies that have already been successful. Many are looking for something that will be a new bitcoin, buying blind currency cheaply. Such investors operate without much plan and often change their minds - they can buy dearly, because the price just grew, and then sell cheaper, because they got scared of declines or invested more than they could lose, which is why they are saving their savings desperately.
The market upheaval that triggered news from Korea and China could have been compounded by the actions of many inexperienced investors who have entered the world of cryptocurrencies in recent months and have not previously made adequate discernment.
Reason # 4: Asians pay money for the holidays
Even on the Polish cryptocurrency market, we could see that before Christmas and New Year's Eve many people tried to sell cryptocurrencies. Shopping madness and the mass of expenses associated with the preparation of holidays and buying gifts makes people reach for savings. Those who keep some money in the crypt, pay them on the stock exchanges.
Asians are doing the same. And the Chinese New Year is slowly approaching, so many bitcoin sales and other virtual currencies may be related to the fact that a lot of people have reached for their savings for wallets with cryptocurrencies.
Reason # 5: Conspiracy theory from Wall Street
At the beginning of the year, companies pay dividends to employees and are told a lot that this time the thick fish from Wall Street will spend their additional resources to invest in cryptocurrencies. US banks have already begun paying dividends and will do so for the next few days.
The conspiracy theory says that the financial manipulation of people from Wall Street led to the breakdown of the cryptocurrencies, so that they could buy them at good prices. If there is a grain of truth in this theory, some may be glad that the opportunity to buy virtual currencies was much cheaper. Others will be frightened by the fact that the market could have been manipulated by someone so easily.
What's next?
In the world of cryptocurrencies we are dealing with a huge bubble, and today it is difficult to assess which information or event had the greatest impact on the decline in prices. Perhaps the crowds of unfortunate information and unexpected movements made that we can buy bitcoin today for nearly half of the December price.
The cryptocurrency market is inflated and the situation with dotcoms will repeat. Then, tech companies that wanted to change the world were invested. Many big companies grew on the rubble of that crisis, which today are among the richest in the world.
With cryptocurrencies, most likely it will be similar. The bubble burst will be verified by the market where only the strongest players and projects will stand, behind which there are interesting services and people who have ideas and skills to develop and sell them well.
That is why today some people get their hair out of their heads today, while others enjoy and buy more cryptocurrencies.