The Annual Global Cryptocurrency Dip Is A Thing

Just as in nature, financial markets have identifiable, repeatable patterns that traders and investors alike have learned to recognise from historical analysis and use to their advantage.  One such pattern seems to have emerged in the crytpocurrency market which could give an advantage to those who are prepared for the next one.

The global cryptocurrency market is just a spring chicken in relation to the age of the world financial markets history, but already it has been noticed that there is a pronounced selloff of assets that coincides with the Chinese New Year holiday.

The Chinese New Year generally sees a huge spending spree, especially on travel to visit families, not just for Chinese based on the mainland but around the world.  Based on the the Chinese government's economic planning body, the National Development and Reform Commission, nearly 3 billion trips are anticipated to be made this year, a 2.2 % increase from 2017 numbers.

Despite government restrictions on ICO's and regulation on exchanges, Chinese investment in Cryptocurrency is huge.  It is well recognised that crypto prices are sensitive to Chinese and Asian markets so it follows on that when a mostly consumer based demographic that dominates some of the more prominent crypto assets sells to fund travel and holiday plans that there will be resulting dip in the overall markets.

The pattern of this event has not gone unnoticed.  As shown below, every year since 2014 the price of bitcoin has dipped in the lead-up to Chinese new year.  Usually leveling out and then recovering after.

Chinese New Year 2014 (31 Jan 2014, Year of the Horse)
Largest drop to US$561.95 low on 18 Dec 2013 - 45 days before CNY

Chinese New Year 2015 (19 Feb 2015, Year of the Sheep)
Largest drop to US$192 on 15 Jan 2015 - 36 days before CNY

Chinese New Year 2016 (8 Feb 2016, Year of the Monkey)
Largest drop to US$380 on 15 Jan 2016 - 25 days before CNY

Chinese New Year 2017 (28 Jan 2017, Year of the Chicken)
Largest drop to US$797 on 11 Jan 2017 - 18 days before CNY

Chinese New Year 2018 (16 Feb 2018, Year of the Dog)
Largest drop to $13,136 on 12 Jan 2018 - 35 days prior to CNY

2018 has been one of the sharpest price drops in market history, likely due to the fact that crypto has been adopted globally on an unprecedented scale.  The usual panic selling when prices drop will have amplified the effect of this event greatly this year as there are now larger numbers of people and more fiat involved in crypto than ever before.

The benefit of seeing a pattern like this however is the ability to be prepared for the next time it happens to take advantage of the inevitable recovery. 

Whether that be a strategic pre-emptive conversion of existing crypto assets to hold in FIAT or USDT ready to buy back in at bargain price for greater holdings or having a stash of  money ready to inject more to add into a crypto portfolio - smart investors will likely have noted to mark this event in their calendars for 2019.



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The Cryptocurrency Portal: The Annual Global Cryptocurrency Dip Is A Thing
The Annual Global Cryptocurrency Dip Is A Thing
The Cryptocurrency Portal
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