The plunge of Bitcoin brings the crypto-market with him. Is this the beginning of the end so much claimed by many critics, or another test for hodlers?
The Bitcoin is down, the whole market looks red right now, there is talk of a possible cryptocurrency trading ban in South Korea and China is not making things easier with reports of a possible crackdown on all tradings on OTC and P2P Exchanges.
The price of Bitcoin has dropped below $ 12,000, the same level as December 5, 2017, and the global ceiling of the cryptocurrency market has lost more than $ 100 billion. If the Bitcoin continues to fall further, we could even find the next support around $ 8,000, it's not very pretty right now.
Why Bitcoin and the market crash?
Developments in South Korea and China have always had a huge impact on the price of Bitcoin, as they are two of the largest cryptocurrency markets, with Korean Exhanges being the major players in the global market.
Given that the Bitcoin market is the largest, with all other currencies matched with the BTC, a fall in the price of Bitcoin almost invariably results in a general decline in the market.
If the trading of Bitcoin is banned, it will leave a large volume of transactions, which will lead to a further decline. The price cuts we are currently experiencing are simply in anticipation of such a ban, as investors and traders sell to reduce losses. In addition, Tether (USDT) is one of the few currencies that has seen its capitalization increase over the last 24 hours, and this indicates that a large majority of investors sold their tokens for USDT.
However, there is potentially another reason behind the current decline, which is not related to these developments.
The Chinese new year
The Chinese New Year, or Lunar New Year, arrives on February 16, 2018, and as Christmas in December brought down, the Lunar New Year also takes money from the markets.
People buy gifts and travel and about $ 100 billion is spent during this period. Given how the crypto market has retail investors, it makes sense that such an event leads to short-term sales.
In fact, a Reddit user (u / Secruoser) has shared an image (below) showing the same trend over the last 4 years.
What should you do in a market like this?
First of all, this is not an investment advice, anyone who invests money in the cryptocurrency should do his own research and take responsibility for profits and losses. That being said, times like this are when you have to make a choice.
If you have entered the crypto for the money, you can look at your own finances and decide if you can afford to stay and risk a bigger downfall or a crash and live with it. But if you believe in certain projects, be it Ethereum, NEO or Bitcoin, markets like these offer opportunities to accumulate tokens with long-term potential and better probabilities of providing real utility.
Almost everything "seems" cheap right now, but you can also compare the price in USD of a token with its BTC price to get an accurate picture. An example of this is NEO, which kills its worth USD, but has just managed to break through its BTC price as of August 2017.
Fianally, it comes down to your own research and your belief in cryptocurrency. If you think it's a craze and you bought Bitcoin at $ 20,000 in December, you're probably very worried that your investment is almost halved. This is also why we always advise caution, as the crypto markets are extremely volatile and with significant gains, they carry greater risks.
Declines are good for long-term growth
One thing most newcomers fail to take into account is that healthy growth requires declines. Nothing can go on forever, the whole purpose of trading and investing is to make profits, and profits are only recognized when the assets are sold. Naturally, those who want to cash profits, whether for Christmas or the New Year, will sell, resulting in a decline, which is then redeemed by fresh money, this cycle continues in a long-term bull market .
You only lose when you sell
Again, this is not investment advice, but if you invest in cryptocurrencies, you can only lose money in two scenarios.
1 - The crypto market is dying, Bitcoin is killed by government regulations
2 - You buy high and sell low
Unless you believe in the first scenario, where Bitcoin is killed by governments and the entire crypto market dies, it leaves you with only the second scenario.
The assumption here is that you are an investor and not a day trader because traders have their own systems. As an investor, if you bought $ 20,000 worth of Bitcoin and now sell it for $ 10,000, not only did you lose $ 10,000, but you also lost a Bitcoin. When, and if Bitcoin goes up again, say $ 15,000, your $ 10,000 will only buy 0.667 BTC.
Again, before making a decision, you must evaluate whether you believe in cryptocurrency or not, and whether the money you have invested represents your life savings (which should not have been invested in the first place ). If you are in the long run, it makes less sense to sell out of panic than hold.
Will Bitcoin get up?
Nobody really knows the answer to this question, but just as there are experts who claim that this will go badly, there are those who project that it will reach hundreds of thousands of dollars.
As for the current state of the market, we are still at the beginning, and there is still a lot to come this year in the form of new developments, new features, new ICOs and new funds.
Historically speaking, so far, Bitcoin has managed to bounce back from corrections and to cross previous highs, it remains to be seen if this will be the case this time.
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