Bitcoin watchers blame the cryptocurrency’s slump on the moon
If regulatory concerns aren’t enough to explain bitcoin’s 50% slump from its record high reached last month, how about blaming it on the moon?
The Lunar New Year, which marks the first day of the year in the Chinese calendar, is being cited by some as contributing to bitcoin’s slump: They say Asian traders cash out their cryptocurrencies to travel and buy gifts for the holiday, which starts Feb. 16 this year. The festivity is celebrated not just in China, but in other Asian countries including Singapore, Indonesia, Malaysia, Korea and Thailand.
“The January drop is a recurring theme in cryptocurrencies as people celebrating the Chinese New Year, aka Lunar New Year, exchange their crypto for fiat currency,” said Alexander Wallin, chief executive of trading social network SprinkleBit in New York. “The timing is about four to six weeks before the lunar year, when most people make their travel arrangements and start buying presents.”
Bitcoin had a similar decline at the beginning of 2017, when it slumped from a high of $1,162 to a low of $752 in January. A similar thing happened in January of the prior year, too.
In 2017, the total cryptocurrency market reached a peak of $22 billion on Jan. 5, only to bottom out a week later at about $14 billion, Joe DiPasquale, who manages the cryptocurrency fund of funds BitBull Capital, wrote in a report. The rebound back to the previous peak concluded in mid-February of 2017.
While Chinese yuan and Korean won used to account for most bitcoin trading volume, regulatory crackdowns in those nations have reduced their significance — and trading in U.S. dollars and Japanese yen now account for well over half the volume. But that’s little comfort to bitcoin investors who have seen prices tumble this year after the cryptocurrency surged 1,400% last year.
So much for bitcoin shooting to the moon.
Camila Russo and Nour Al Ali write for Bloomberg.
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