- 1. Chinese New Year is right around the corner
- 2. February is historically bearish for crypto markets
- 3. Bitcoin is in heavy accumulation
The global crypto market capital has shed another $7 billion today, as Bitcoin and the wider altcoin market continue to struggle to find support. We’re here to explain why this is happening right now.
Bitcoin is the main trading pair with every other cryptocurrency or token on most major exchanges. If Bitcoin’s price rises, most other coins and tokens also rise, sometimes even outperforming Bitcoin itself in price action. The same is also true if Bitcoin’s price declines. Traders love this volatility, but smaller investors trying to time the market often get wiped out.
Here are 3 major reasons for why the crypto market has been in it’s recent slump, despite the hype surrounding Bitcoin’s upcoming halving. Let’s take a look.
1. CHINESE NEW YEAR IS RIGHT AROUND THE CORNER
In two days, Chinese New year kicks off, and all of China celebrates in a big way. This year will be the year of the rat. China is one of the largest crypto markets on the planet despite crypto trading being banned within China. Many Chinese traders have managed to continue trading in S. Korean and Japanese crypto markets to get around the ban domestically.
Arthur Hayes of Bitmex, the largest volume Bitcoin exchange, has predicted that we will see a large decline in Bitcoin price and trading volume, as Chinese New Year celebrations kick-off. This is from the impact of Chinese traders taking a few days away from crypto to celebrate the new year. In the last 24 hours bitcoin is already down 2.6% and we still are two days away from the commencement of celebrations. If this year is anything like prior years, his forecast might be spot on.
2. FEBRUARY IS HISTORICALLY BEARISH FOR CRYPTO MARKETS
Bitcoin has only been around 11 years, but we can still analyze existing market data to forecast it’s yearly cycle. Traditionally, the first quarter has always been bearish for Bitcoin. Since Bitcoin is the original crypto asset and market leader, every other coin is highly correlated to it. Since almost every other crypto is traded against Bitcoin on every major exchange, they tend to be deeply impacted by shifts in price, both positive and negative.10 BTC & 20,000 Free Spins for every player in mBitcasino’s Winter Cryptoland Adventure!
This means that if we have an event which causes a price decline (like many speculate the upcoming Chinese New Year to bring), then many Altcoins will suffer a greater decline in comparison to Bitcoin. Many expect the upcoming halving of new Bitcoins produced to cause prices to rise eventually, but it is usually a delayed phenomenon that doesn’t actually cause prices to rise until the increased scarcity is felt months later, as the decreased supply makes itself more apparent.
3. BITCOIN IS IN HEAVY ACCUMULATION
Analysts Tuur Demeester of Adamant Capital and Willy Woo of Adaptive Capital have both insisted that Bitcoin is currently in heavy accumulation by institutional investors. They each make a convincing case for hedge funds and Bitcoin Whales using sell walls to keep Bitcoin’s price within an accumulation range $6000-$8000 USD to get as much Bitcoin exposure as possible before the halving takes place in May.
If the first two Bitcoin havings are any indicator, we should see a massive rise in price once the added scarcity of a reduced block reward for miners puts price pressure on existing Bitcoin supply. After the last halving, we saw Bitcoin rise to the all-time high of $19, 891 dollars. Many Bitcoin investors believe that the upcoming halving will have a similar effect on price
Crypto Analyst: Evil Whales Behind Bitcoin, Ethereum, EOS and Altcoin Market Rallies in 2020
Crypto analyst Jacob Canfield thinks that criminals from China and Korea are behind a crypto Ponzi scheme driving the bullish price trends of Bitcoin, Ethereum, EOS and the greater altcoin market.
The infamous scam PlusToken launched in 2018, promising investors high-yield returns from “exchange profit, mining income, and referral benefits.” It reportedly drew in three million registered users.
The organizers of the scam initiated an exit strategy in June of 2019, stealing an estimated 90,000 to 200,000 Bitcoin (BTC), 790,000 Ethereum (ETH) and 26 million EOS.
Now, after multiple accusations that PlusToken scammers have sold Bitcoin and driven the price down, Canfield says he believes the thieves may be re-entering the world of crypto, manipulating the market and steering the bullish rally of 2020.
“They are sitting currently around $600 million worth of capital cash, and it was done on what we believe was Huobi and OKEx exchanges which are in China, and the problem with Huobi is the order books are closed so you can’t really view them or see them.
If they’re using their capital to push the Ethereum market, they can use $100 million, $200 million and push Ethereum back to 300, 500, 600, 900, 1,000, and then they’re going to get a much bigger bang out of their buck.”
With the stack of cash they may have accumulated, Canfield says the scammers are now more than capable of rigging the market.
“A lot of analysts, a lot of really smart analysts believe that PlusToken was the real big catalyst of why Bitcoin went from $3,500 all the way up to $14,000. Now, how does that work? When all of these people are buying Bitcoin, that’s removing Bitcoin from the circulating supply, so it’s artificially removing over 1% of the circulating supply of Bitcoin.
It’s creating artificial FOMO, that fear of missing out on Bitcoin. You see two things. You see your reduced supply, but you also see an increased demand, and that’s the economics of what moves the market. You also add in the derivatives market wherein in 2018, when we saw that massive drop in the start of 2019, we saw shorts at an all-time high because they believed that was going to go all the way down back to $1,000. So when we broke out 4,000 and all of these people are FOMO-buying Bitcoin, Ethereum and EOS to try and get into these markets, it creates artificial buying pressure.”
Canfield also cites Google Trends which shows that searches for Bitcoin have not increased at the same pace as the price of BTC. He says that indicates something is amiss with the current price trends in cryptocurrency relative to people’s interest in the king of crypto.
“This was not retail FOMO – it was a very small part of it. This was artificial buying pressure because of this PlusToken scam.”
In June of last year, six Chinese nationals accused of participating in the scam were arrested in the South Pacific island nation of Vanuatu.
Despite the arrests, there have continued to be large movements of BTC with suspected links to the alleged crypto Ponzi scheme.
European Union’s Latest AML Directives Means Banks Can No Longer Shut Down Crypto
If regulators around the world, or at least within the EU, recognize that cryptocurrencies can be researched and analyzed it is possible to avoid de-risking.
The crypto company is faced with a lot of obstacles in the way forward. Anyone interested in the cryptocurrency sector is aware that it is not only regulations that pose the greatest threat to the viability of the venture, but also lack of access to very basic financial requirements, such as a bank account. This is threatening to bring down the crypto business by shutting it out of the mainstream economy.
Such practices are referred to as de-risking. De-risking can be brought about by a number of factors such as prudential needs, profitability concerns, anxiety after the global financial crisis or even esteem concerns. Actually, the Financial Action Task Force (FATF) identifies de-risking as the event where financial institutions discontinue or limit their business relationship with some clients or a sector of clients.
Nevertheless, the FATF only allows financial institutions to put an end to business relationships on a case-by-case basis, not to cut off the entire business field. Nevertheless, this remains a major obstacle for the cryptocurrency industry. Nevertheless, this may soon change due to the much-awaited Fifth Anti-Money Laundering Directive of the European Union, also referred to as AMLD5
Cryptocurrency Business Falls Under the Same Designation as Banks
The Directive, which was introduced in July 2018, considers virtual assets and virtual asset service providers as ‘ ‘obliged entities.’ This means that cryptocurrency organizations, such as exchanges and wallet service providers, come under the same designation as banks, payment processors, gaming and gambling entities. Provided a cryptocurrency business is approved and compliant with the relevant authorities, it should be treated in the same manner as the above entities.
Going forward, in the light of AMLD5, financial institutions such as banks should handle AML risks individually or directly. They should not deny services to the entire sector but deal with such cases on an individual basis. A bank can not deny service solely because an entity belongs to the cryptocurrency sector.
Indeed, this presents both an opportunity and a challenge to the digital assets industry. To realize its true potential and even reshape the financial sector, crypto and blockchain technology should welcome criticism from regulators across the globe. These businesses should use the AMLD5 as a stepping stone, a drive to prove to the whole world the significance and commitment to providing real-life solutions and transparency. Those working on developing solutions using the blockchain technology should be open to working with the government, the regulators and even financial institutions to create a regulated, clear business framework that recognizes the fundamentals of the crypto world.
Furthermore, we can say the AMLD5 is a very positive development for the virtual assets space. It is of utmost importance now for the founders and developers to work with EU regulators and even others to build a working relationship that works for everybody. Although the AMLD5 has its own disadvantages, it is a start for the digital currency industry to put a foot inside the mainstream economy positively. This will enable the industry to expand, grow and even flourish.
It is my aspiration that AMLD5 should be a message to financial institutions that the virtual currency industry should be treated in the same way as all other business sectors. Cryptocurrency should be treated fairly, on a case-by-case basis, like all the others. It is time for all stakeholders to come together and use this technology to provide real-life solutions to the world.
Indicator That Signaled 4,593% Bitcoin (BTC) Rally Now Flashing – But This Time Ethereum (ETH) Is the Coin to Watch, Says Crypto Analyst
A signal that flashed at the start of a historic 4,593% Bitcoin (BTC) rally is back, but this time it’s happening to the second-largest cryptocurrency by market cap, Ethereum (ETH).
A trader known in the industry as Alunaut tells 68,000 followers on Twitter that the price of ETH has crossed above the Ichimoku Cloud.
The cloud, also known as the Ichimoku Kinko Hyo, is a mashup of several indicators that identify levels of support and resistance, track momentum and spot potential trend shifts.
The same indicator flashed green for BTC in April of 2016, ahead of its long-term move from about $430 to an all-time high of $20,089.
However, in the highly volatile world of crypto, Bitcoin remains king, and the direction it takes will likely determine where the market at large is ultimately heading.
To that end, the prominent crypto analyst DonAlt warns that if BTC begins to retrace below $9,184, he’ll become “super bearish” on the market in the short term.
If Bitcoin begins a significant retracement, he identifies $7,900 as an area of support on both the weekly and monthly charts. DonAlt says he’s paying especially close attention to the monthly close of BTC.
“The absolute state of this current monthly candle. Bulls better fix this in the next 10 days.”