Yesterday, December 23, 2017, most cryptocurrencies fell significantly. The most popular ones monitored by us - Bitcoin, Ethereum, Ripple, Litecoin, Dashcoin - recorded corrections of approximately 50%. This event had been expected for some time and may give rise to a new rally period in cryptocurrencies.
The bubble burst
On December 17, BITCOIN cost 19,000$, after which depreciation began, reaching 15,000$ on Thursday, and yesterday it shook off another 30% of its price, getting close to the psychological threshold of 10,000$, mentioned in the previous article. However, it did not stay low for long because, as we said, it was a very good position for investors, a good price for Bitcoin, so participants began buying again and the market turned sharply upward.
The storm seems to have passed! But why did they collapse?
No negative news was announced in unison across the financial world, so only the technical scenario remains to be analyzed. Major holders of cryptocurrencies, who bought them many years/months ago and did not sell them, suddenly decided to take profits after the psychological 20,000$ zone for one Bitcoin was tested. Thus, sellers prevailed in the market this week.
In fact, it has happened before, but it was forgotten. Here is the history of the biggest burst bubbles on Bitcoin
- If we avoid the chart movement when it was still quoted in cents, then already in 2013, after rising in 3.5 months from 12$ to 250$, it then fell to 50$!
- Also in 2013, Bitcoin rose in 7.5 months from 50$ to 1000$, then, after 3 weeks, it fell to 400$, and in January 2015 it returned even to 160$.
- In 2016, Bitcoin had risen to 750$, only to then fall to 450$.
- And 2017 was full of such events, when the cryptocurrency:
- appreciated to 1100$, followed by a correction to 750$;
- rose to 1,300$, then corrected to 950$;
- rose to 3,000$, corrected to 1,800$;
- rose to 5000$, corrected to 3,000$;
- rose to 7,800$, corrected to 5,500$;
- rose to 17,000$, corrected to 13,000$;
- rose to 19,000$, corrected to 11,000$;
- from 11,000 yesterday, today it is already at 14,000$ and "to be continued...".
When there is panic in the market, investors enter the race!
Of course, prices for this virtual asset rose so quickly that many suspected it was a speculative bubble. And yet, more recently, the previously unknown Bitcoin has come a long way and is ready to enter the global financial system as a full participant.
In October 2017, LedgerX opened the first CFTC-approved clearing house for cryptocurrencies and began trading options and swaps. Cboe Global Markets and CME Group began trading Bitcoin futures contracts. The New York Stock Exchange, Intercontinental Exchange and, without doubt, many other exchanges intend to create exchange-traded funds based on Bitcoin futures contracts.
Bitcoin futures contracts are already traded on CBOE and CME and, while volumes are still quite limited, there is reason to assume that the exchanges will take their market share and that it will grow. At the same time, signals coming from hedge funds indicate that they are seriously studying the possibility of investing now, when there is already a fully understandable instrument in the form of futures contracts.
