Hello everyone!So as most of you probably have already seen, we have another big blood bath, BTC hitting 8000$, not even talking about the altcoins. So what is happening? Well in my opinion, it is combination of two factors.
In the last few days, there was a giant FUD about India banning cryptocurrencies. It was a misinterpretation of the statement from India finance minister Arun Jaitley. He has said the following:
The government does not recognize cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.
Mainstream media then started the with-hunt and spreading the FUD of India banning cryptocurrencies. This had great affect on the price and got the BTC under 10K, hitting support line at 9000. But today, we are hitting the 8000 support line, why is that? Well, there comes the second factor.
We are closing to the Chinese Lunar New Year! Why is that a factor? Well, because most of Asia celebrate it and it is one of the biggest, if not the biggest event there. Quite a lot of people from Asia working overboard will come home to celebrate with their families. And what do they need? Money. And a lot of it, as Chinese New Year is the biggest spending spree in Asia. So when they see the FUD about India and the BTC going down, they will panic sell as they can't afford to lose any more or they would not have money for big spendings. And also it is not so long ago we have had the Korea FUD about BAN of crypto...
There is also the third factor. People see that governments are actively trying to regulate crypto markets. Some of them panic sell, some of them decide they have already pocket filled and some of them simply lose the trust...
In my opinion, combination of those factors led to this blood bath. I might be right, I might be completely wrong. What is your opinion?
Link to the article explaining India FUD here:
https://cointelegraph.com/news/india-bitcoin-prices-drop-as-media-misinterprets-govts-regulation-speech In my opinion, these are all factors that triggered the bloodbath, but really we were waiting for one because the December almost vertical price rise was clearly unsustainable, and the market just needed any excuse to correct.
And then once the fall started, it was massively amplified by all the newcomers who bought in during the December rush. I think these were inexperienced people unfamiliar with crypto volatility, and desparately trying to cut their losses. And then obviously each time one of these people sold the price fell farther, drawing in more sells from newcomers. Meanwhile more experienced traders could see what was happening, and a nice opportunity to short their coins for big profits.
I really think that the swathe of newcomers who fuelled the December rise are the main reason that the January/early Feb fall has been so hard. Unfortunately for them, they are the biggest victims - most other people were either trading up or just holding.