Digital economy day-traders cried in despair again as prices for nearly all assets plunged suddenly into the deep red on January 16th. The usual scrambling for reasons and answers ensued, placing blame for the carnage on everything from more “China bans” the pre-Lunar New Year buildup, and even Bitcoin Futures.
CoinMarketCap this morning was awash with more red than the bathroom scene from “IT”, with traders and hodlers staring helplessly into the basin plughole. There was a slight bump upward on the evening of the 16h (U.S. time) but it didn’t fix the mess.
Nearly every asset suffered a double-figure percentage drop. Bitcoin was struggling to hold its above-$10K floor, while Ethereum and Dash plunged screaming out of the thousand-dollar club. Litecoin, Ripple XRP, Bitcoin Cash and several popular tokens-du-jour like NEO, IOTA and ADA also got a bloody soaking that will take a while to scrub off.
The only token in the green was tether. Given the reason for tether’s existence is to maintain a 1:1 peg with the USD, that’s not heartwarming.
Bitcoin fans on r/bitcoin maintained a stiff upper lip, noting that $10,000 was cause for celebration just over a month ago. While that’s true, everyone knows it’s like being comforted with a cold, wet blanket. And it’s no comfort at all to anyone who bought into any crypto after early December. So what happened?
Did China Do it… Again?
It’s always easy to blame China, cryptocurrency’s favorite bogeyman since 2013. Allegedly by its own admission, the Chinese government likes to mess with the minds and confidence of bitcoin traders by periodically trickling out ambiguous reports of impending trading/mining bans.
Recently we’ve heard reports of bitcoin miners being run out of the country, and indeed most major Chinese companies are looking for offshore options in places like Canada. Then just the other day, there were more rumors that China also intends to clamp down on P2P, over-the-counter (OTC) or informal trading.
However, Sandy Liang of crypto data service BitKan told Bitsonline that the reports were yet another example of media overreaction, saying the government intended only to “regulate” such trading, rather than ban. Sound familiar? It should — the crypto world has thrived and dived on this story cycle for years — with even Korea joining the party recently.
No Clear Culprit
Some posts suggested it was “Chinese New Year” causing an activity lull, however that holiday is late in 2018, with festivities not ramping up till the first week of February. If the lunar new year indeed crashes crypto prices, it’s (oh god) yet to come.
It’s also debatable whether Bitcoin Futures offerings on “mainstream” trading platforms like CME, TD Ameritrade and Cboe have had much impact. In any case, they should only affect the BTC price and not digital assets in general.
Is the speculative world cooling on the crypto craze? Or is the market still recovering from its end-of-year hangover? While we can and will not advocate buying or selling any token, the advice as always is to do your research into the various projects, look for real potential value, and only bet money you can afford to lose.
What’s your theory on the latest crypto red day? Please share your thoughts in the comments.
Images via CoinMarketCap, Pixabay