The world's main cryptocurrency has already experienced both ups and downs in its short existence. Sometimes Bitcoin soared by 1000%, and then fell sharply by 40%. Since its appearance, the future of Bitcoin looked very blurry. And the next five years of exchange rate fluctuations were insignificant. Only since 2013 Bitcoin began to rapidly gain popularity.
The crisis in Cyprus contributed to this, as a result of which about a hundred billion dollars were "frozen". Investors and ordinary people frantically rushed to withdraw money from banks that had gone bankrupt. It was during this period that many turned their attention to Bitcoin as one of the ways out of the current situation.
Active purchase of cryptocurrency by investors of the Celestial Empire led to the growth of the rate by more than 1000 percent. Such rapid growth could have continued further. But a powerful DDoS attack brought down the servers of the GOx exchange, as a result of which in February 2014 the Bitcoin rate fell by 40 percent almost at once. After that, Bitcoin won back what it had lost, and in addition, continued its further growth, which continued with varying degrees of intensity until the very last moment.
Factors influencing the change in the value of cryptocurrencies?
- laws of the classical market of supply and demand: if there is demand and the consumer buys more than he sells, then the value of this asset, whatever it is, increases. As soon as sales exceed the volume of purchases, the rate falls;
- resource limitations. Bitcoin will not be produced forever. The final number is already programmed;
- information background is one of the most powerful tools for influencing the stock exchange. The exchange rate can fall or rise sharply only as a result of certain statements on the network of a certain content, for example, prohibitions or permissions, and they are not always true;
- technical stability is very important for cryptocurrency. The experience of 2014 showed the dependence of the rate on a powerful DDoS attack;
- The emergence of a new type of cryptocurrency can shake the position of any, even the most well-known cryptocurrency.
But all this does not mean that Bitcoin is not worthy of interest from investors. Volatility is a property not only of cryptocurrency, but also of the traditional currency to which everyone is accustomed. In addition, compared to some of its brothers, Bitcoin holds its position more stably.
Just as Bitcoin, and then the entire cryptocurrency market, showed growth after the pre-New Year correction, a new one began on January 7. It brought the market down to 679 billion $ capitalization, and some traders called this period "red week" because of the red color of the price indicator zone.
What caused the market collapse?
When the price of Bitcoin decreases, the price of all other altcoins decreases. Bitcoin affects all other cryptocurrencies. Actually, the correction of specific cryptocurrencies themselves. Each cryptocurrency, as everyone knows, has a correction that does not depend on the influence of Bitcoin. For example, the sensational cryptocurrency Ripple, after growing from 0.7$ on December 21 to a peak of 3.28$ on January 4, began a deep correction, later stimulated by the influence of Bitcoin, as a result, today we have a price of 1.8$ per coin, and a fall of 45% in a week.
Why did Bitcoin fall in price?
Surely many people know that Bitcoin is influenced by people or groups of people, the so-called "whales", that is, large investors. The root cause of the "red week" is the news that Bitcoin futures trading has begun on American exchanges. This allowed the "whales" to earn on the fall. Since Bitcoin is very susceptible to the news background, these large investors pay for expensive fake news of a negative nature about Bitcoin. This week there were two main ones, the first concerns the introduction of a tax on cryptocurrency in China, and the second about the alleged ban on Bitcoin in South Korea. These news were refuted, but this did not stop the fall. Thus, these "whales" or groups of "whales" managed to influence the Bitcoin rate by almost 20% in a week. Why are these manipulators playing for a fall in the rate? They are not sure that against the background of positive news, they will achieve the percentage of profit they expect, whereas, playing for a fall, they are confident that they will be able to sow panic among smaller investors.
What happens next?
Nobody knows, however, most likely the price of Bitcoin will drop a little, and in the coming days, these "whales" will "fix profits". After that, the rate dynamics will become positive up to a certain point, where the "duck" will be launched in the media again. Also, it is unlikely, but possible that these traders will lower the price as much as possible to about 5000$, where they will actively buy Bitcoin, and sell at 18000-20000$.
What can be done?
Now is a great time to “enter” cryptocurrency. At the same time, it is important to remember that you should never panic and sell cryptocurrency at a price lower than what you paid for it earlier.
