Yesterday, on December 22nd, cryptocurrency began to take its first big nosedive in a long while. With the consistently rising values of most major currencies the past few months, this sudden drop in value might seem like it would have been a big surprise. Interestingly enough, many investors and knowledgeable advisors have been anticipating this drop for the past week.
Many YouTube videos were touting that a decline would happen before the year’s end, and it appears they were right. Data shows that in the past four days, all the major cryptocurrencies hit all-time highs, and yesterday morning they all took a rapid drop.
Two days ago, a large decrease in the price of Bitcoin, reaching as low as $12.5K, appeared to have caused a domino effect where all other major digital currencies began suffering drops in value as well. This drop amounts to a decline of 20 percent in the world’s cryptocurrency market cap.
There are a few reasons that played a role in the sudden decline. Quite honestly, it is the holiday time, and many people tend to withdraw yearly gains to cover holiday expenses. Not to mention, many investors may be considering the volatility of the crypto market and deciding they could better use the crypto coins by converting them to cash this time of year.
Secondly, and this is a big one to look at, Bloomberg recently shared that a group consisting of 1000 investors owns around 40 percent of all the Bitcoin in existence. Unfortunately, this allows for the potential to control the market, if even a few of those investors are working together. It is possible that these major players in the market could have made it look like Bitcoin was skyrocketing in value, by selling and re-selling the digital money back and forth to one another.
The reasoning behind doing this would be to raise the value of Bitcoin as high as possible before facilitating a crash by selling off large quantities of their Bitcoin stock, causing alarm to others. Once enough people sell it off, and the price has dropped dramatically, those whale investors can buy back in and watch the value skyrocket again. This cycle could happen over and over until enough people catch on. This is all speculation of course, but possible.
Another contributing factor could be that Coinbase added Bitcoin Cash (BCH) to their exchange, and lots of investors simply moved their money from Bitcoin into BCH.
Lastly, the past few months of Bitcoin excitement has funneled into other digital currencies, such as Ripple, Verge and Cardano. As people have started looking at other potential crypto currencies to invest in, they may have caused a decline in Bitcoin by leaving Coinbase to use other exchanges and taking funds from BTC to use for other currencies.
Despite the huge drop recently experienced, prices are already stabilizing and/or heading back up. Many crypto financial gurus speculate that there will be a huge spike in value again, after the holidays, at the start of 2018. Only time will tell, but the majority of investors believe cryptocurrency is still the way of the future.