Bitcoin enjoyed a record breaking 2017 where it gained over 1500% in value. Though that success has led to many new investors dipping their feet in the sector, most are not enjoying their portfolios shrinking over the mid-January period of 2018.
To put things in perspective, the facts below from BitcoinPlay suggest that Bitcoin as a whole has enjoyed massive gains. If you had invested $100 in BTC in 2010, today that relatively small investment would be worth over $10 million. So why has Bitcoin been in a slump? The answer is a mixture of a few different factors.
Here are a few of the biggest of those reasons.
Bitcoin Over-Speculation
One of the top reasons that Bitcoin went through a massive correction is due to the over-speculation in the industry as a whole. Whenever an asset performs so amazingly, the general public jumps on the bandwagon, causing the price to skyrocket. As that demand starts to cool off, the prices return to a more acceptable level for the more serious investors in the sector.
As Bitcoin prices are a reflection of what people are willing to pay for it, people were willing to pay more while Bitcoin was on a roll. When that roll, caused by new capital entering the markets, was over, the price was sure to return to a level that was more reflective of the overall investor sentiment.
The Davos Summit
Another major reason for Bitcoin’s sluggish performance in January 2018 was because of the financial elite gathering at the world economic summit in Switzerland. While Bitcoin was not the main reason for the summit, many of the world’s central bankers and financial politicians were very critical of Bitcoin’s stardom and warned that regulation was coming.
Theresa May, the UK Prime Minister, was one of those voices that expressed a desire to heavily regulate the cryptocurrency sector over the following months. Additionally, other world leaders from the G20 also stated similar concerns with the sector and helped in creating a ceiling above which serious investors are not willing to invest due to the unknown level of regulations coming to Bitcoin and other digital currencies.
India, China & South Korea Freezing Exchange Accounts
China and Korea are two of the biggest markets for Bitcoin trading. China has already banned ICOs and recently banned trading of digital currencies. South Korea, the world’s 4th biggest Bitcoin market also had a similar rumor leaked from their ministries. This caused an immediate sell-off by the investors in those countries.
Additionally, India has also reportedly blocked some investor accounts and sent tax notices to other investors in the country. With so much uncertainty in the sector and those countries making up a huge percentage of the overall Bitcoin-investing populations, traders are waiting for clear explanations on regulations before re-entering the markets.
Exchange Hacks
If all that bad news was not enough, recently, a large exchange based in Japan was hacked for a reported $400 million worth of NEM coins (a Bitcoin alternative). While the exchange has reported they will reimburse clients out of pocket, the hack has made people rethink the security concerns surrounding these exchanges.
While Bitcoin has been sluggish to start 2018, the truth is, considering the overall level of negative news, it has remained relatively stable around the $11,000 mark. It would seem that, though new investors are waiting to enter the sector, the diehard coiners are holding their coins and waiting for the market to become bullish again.
While those who did invest at the market highs of December are likely unhappy, many of the long-term holders remain well in the green and will not sell anytime soon.
More Insane Facts About Bitcoin (infographic)
The post Bitcoin’s January Woes: What Caused The Massive Market Correction appeared first on Statii News.
source http://news.statii.co.uk/bitcoins-january-woes-what-caused-the-massive-market-correction/
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