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What caused the January crypto crash

Could we have predicted a crash in cryptocurrencies in January? According to the historical charts it has happened before for the past few years. With so many new and inexperienced traders entering the markets looking for a quick buck they become fueled by FOMO and FUD. Those that do not understand the technology or what they are buying into will simply jump on a crypto bandwagon they’ve read about on some out of control Facebook page. Likewise they will drop it just as quickly after reading some unsubstantiated fearmongering from questionable news sources.

FUD has been winning over the past week as markets lost over 40% of their total combined market capacity. Constant bad news out of China and South Korea has just added gasoline to the digital fires. Panic selling has ensued and the drop off has compounded sending Bitcoin and its brethren into the abyss. Or so it may seem.

Hold on a moment and zoom out to the three month chart and you will notice the upward trend is still being supported. Three months ago the total market cap for all cryptos was $160 billion, today it is $540 billion which is an increase of over 230% for the period. Panic selling is driven by fear and inexperience in an embryonic market. However there may be a pattern here if we consider that there has been a major market correction in January for the past four years.

This year it has been exacerbated by this influx of newbie traders who probably didn’t even know what an altcoin was this time last year. It has been speculated that there are other influential factors such as the impending end of the tax year or the expiration of the first Bitcoin futures contracts.

Furthermore a major Asian holiday is approaching in the Chinese Lunar New Year next month. Asia is responsible for the bulk of crypto trading so what starts there sends sentiment west as the day goes on. An Asian selloff for the holiday period, which needs to be funded in fiat not crypto, could have been one of the catalysts this year and previous. People will be taking extended periods off work to travel and visit family, cashing out some of their crypto could be a way to fund this.

Of course this is all speculation but the chart patterns in previous years do not lie. The January dip is a normal movement in the world of crypto and at the time of writing markets look like they’re already slowly starting to bounce back.

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Cryptocurrency Market Crash: Bitcoin, Ethereum, Ripple, Litecoin Hit Monthly Lowest – Bloodbath

Despite the over-night attempt of cryptocurrency prices to stay above critical psychological supportive marks, Sep 14 as time of the press the whole market has experienced a price drop which led to monthly lowest of the top leading virtual currencies.

The market capitalization of the global range has dropped to only $120 billion just now which has not happened since early August. In the last 24 hours most cryptocurrencies in the top-ten are experiencing double digit losses more-so in a weekly understanding the decline is up to 40%.

cryptocurrency prediction

Source: Coinmarketcap

Bitcoin is aiming to go lower than the major $3,500 mark which could be good news to use as a buying dip and bad news in the matter of lost supportive trading ground. This is its monthly lowest since early August.

As predicted in an early writing today for Ethereum price, the bearish setup has acted its way pulling the value lower against the US Dollar breaking any support in its way. After clearing the formed $274 support on the hourly chart for now the decline will continue as long as the whole market drops in prices.

Very surprising is Litecoin’s monthly long run which was always above the $60 supportive line, hovering under the $70 mark. In a couple of minutes its 24-hours lost raised to negative 20.00% hitting the $47 mark – also monthly lowest.

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Litecoin Price 20% Drop in a Couple of Minutes – LTC Analysis Sep 9

Litecoin, together with the complete market recovery, was taking good steps towards price gain, however in a matter of minutes the pair LTC/USD declined for 20 percentage points.

The major sell-off as its happening quite often, was lead by Bitcoin then Ethereum and so on. Litecoin did drop from $79 to $63, which mark has not been met since Sep 5 of another minor value crash. The market cap experienced proportionally the same descending for almost $1 bln: from $4.1 billion high to $3.3 bln low – According to Coinmarketcap.

A 13.73 percent loss in the last 24-hours, third highest decline after Bitcoin Cash and Ethereum Classic.

litecoin price prediction

Source: Coinmarketcap

The price trade as paired with US Dollar right now is just hovering below the $70 level while it did break it once but the buyers could not withstand the quick-term selling pressure made on the particular resistance point.

There will be continually attempts to get the price over the $70 and keep it there with stable ground but mind the sellers that want to book some profit in case there could be a near term market drop like Today morning.

Overall, the price of Litecoin and each of every-coin develops depending on the popularity, demand and network upgrade but for now the market has a whole for two weeks now is shifting between ascending and descending – following the leaders Bitcoin first movement.

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China Banning Regulation towards ICO could be Tanking Ethereum Price for Major Descending

For two weeks now, today was the first time Ethereum against the US Dollar dropped lower than the $300 level, undergoing and testing the $280 support. According to data from Coinmarketcap, approx $6 billion of market cap were “lost” in 24 hours. This happened and followed after indicators were there for a recovery trend to come upon ETH/USD.

ethereum price prediction declining

Source: Coinmarketcap

On another side of the industry, the PBoC (the People’s Bank of China) together with the Central Bank reported the decision-making phase towards ICOs has come and their regulation. According to the source, the safety-strategy will be putting borders around ICOs, taking notice and supervising tokens and publishing investment risk alerts. In the event of a market risk, the plan concludes with a high-chance of denying and suspending all Initial Coin Offerings.

Movements and actions that will be taken related to ICOs will be based on an executive order formed in 1998 by State Council:

“Illegal financial business activities include: fund-raising targeting not specific objects without legal approval, or other activities that the People’s Bank of China identified as illegal.”

Today, in the morning as reported and announced by global-scale famous news platforms – the PBoC has decided to ban and declare illegal ICOs and initiate a state range investigation.

However, many see this as a positive strike for the market as for the longer-term understanding related to Chinese ICO market as it could be the first step to regulating the particular market.

Zennon Kapron – Shanghai-based fintech consultancy Kapronasia Director, is one of the analysts that concludes in an optimistic feeling about the recent PBoC actions:

“Regulators globally are struggling to understand what ICOs are, what the risks are, and how to ring-fence and regulate them. China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them… I think it will be slightly a temporary measure.”

Keeping in mind that the Initial Coin Offerings (ICOs) could be one of the major and largest Ethereum use cases and market demand since it launched. That is why any negative regulation or action on ICOs by GOV bodies that have a dominating market like China has, could be resulting with descending in price for Ethereum in general.

This is just another factor for the major correction which is to be acknowledged by the community and traders/investors that followed that significant upward rocketing of the whole market for a few weeks in a row.

But for hoisting up optimistic thoughts on the mid-term market predictions, do not forget about the Ethereum network development that are upcoming and are of great importance. The Metropolis hard fork effort by the Ethereum Foundation, the much anticipated Plasma solution which is co-authored by Vitalik Buterin and Lightning Network developer Joseph Poon.

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