It’s certainly been a wild ride for cryptocurrency favorite bitcoin so far in 2018, but its fluctuating price may not be as daunting as looks on the surface.
That said, while bitcoin was valued at nearly $20,000 in late December and has since dipped to roughly $10,000 in January and–most recently–dipping below the $9,000 threshold for the first time since November, this type of fluctuation, particularly this time of year, isn’t abnormal in the crypto space.
Why? Well, perhaps the Chinese New Year might have something to do with it.
David Mondrus, CEO of Trive was quoted in an email saying that the Chinese New Year–which takes place February 16–is “exerting its annual affect.”
“We expect a sideways [or a] slightly down price moving through mid-February, with growth again resuming in March,” he said.
In an interview with the Investing News Network (INN), Mondrus said in the weeks leading up to the Chinese New Year, the market drops because the Chinese are pulling out their money for the New Year. Mondrus further explained that the Chinese New Year is like “Christmas, New Years and Thanksgiving all rolled into one.”
“We expect [the bitcoin price] to turn around and go back up again,” Mondrus said.
On Thursday (February 1) however, India’s finance minister Arun Jaitley provided a union budget speech in parliament, stating the government doesn’t consider cryptocurrencies as a method of legal tender, according to a speech transcript published by LiveMint.
“The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,” Jaitley said in his speech.
Jaitley continued, stating that the government will consider the use of blockchain technology “proactively” for bringing in digital economy.
While Jaitley’s comments on Thursday have ignited some level of fear surrounding government regulations on digital currencies and the price of bitcoin overall, bitcoin’s January blues since reaching its high of just under $20,000 in December is still leaps and bounds from its pricing point in January 2017.
Early last January, bitcoin reached just over $1,000 for the first time in the year, and steadily increased throughout 2017–by 1,300 percent, no less–to its high of $19,783.21 in December. As of 4:27 p.m. EST on Thursday, bitcoin was valued at $9,169.37, an increase of 819 percent since January 1, 2017.
Similarly, Mondrus said he thinks bitcoin can climb back towards its record high over the next few months, it will provide a “big affirmation” for those who came into the space early. So, hold tight bitcoin enthusiasts–all hope isn’t lost in the crypto space, after all.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.