If you live in the America’s and you just woke up and looked at your phone to gauge your portfolio, you just had a bad time!
I’m based in South Africa and watched my HODL (holding portfolio – not for day to day trading) portfolio slowly drop by 30% in value.
I’ve spent much of the day trying to figure out why the prices of all of these currencies have dropped so much, and here’s the best that I can find so far. I will be updating this as and when new information comes in.
South Korean Justice Minister hints at a ban (again)
We’re kinda tired of this one, it seems to be happening more and more frequently, and I’m really close to fetching my aluminum foil hat to start talking about conspiracy theories, but lets do that just yet!
What do we know?
We know that last week the Justice Minister, Kim Dong-yeon announced that banning cryptocurrencies as a whole was a possibility.
A few hours later, the Finance Ministry said that ultimately they do not support it.
The government then further said that banning of cryptocurrencies was not on the table, rather that they would continue to review it and work on the regulation of the crypto market.
Today, on a local radio station the Kim Dong-yeon stated that banning cryptocurrencies was a “live option” and that the final decision was subject to governmental review and approval.
This has once again caused panic and angst in South Korea. Since the region accounts for around 20% of cryptocurrency trading, tghe rest of the world seems equally concerned.
We also know that in South Korea, exchanges previously allowed anonymous accounts to be open, and they also have quite an interesting anonymous temporary bank account system. As with any government, this is far from ideal if you want to tax people, so the Korean government banned exchanges from opening anonymous accounts on their platform, and also banned exchanges from sending withdrawals to anonymous temporary bank accounts.
Is it possible that we are seeing a large group of people leaving the Korean markets and cashing out in order to avoid their funds being frozen? This could consist of foreigners who have been doing arbitrage and taking advantage of the far higher cost of these currencies in Korea, young people under the age of 18, and of course, criminals who took advantage of the anonymity.
Yes, the last part is pure speculation, but I think its possibly more realistic than “The Korean Government is purposefully manipulating the market to benefit itself” Is it possible? Sure, but probably unlikely.
French Government Looks to Regulate Cryptocurrencies
This bit of news came out late yesterday, however, it took approximately 6 hours for clarity from the first article that went out “France declares war on cryptocurrencies…” to “France Appoints a Cryptocurrency Mission Leader“
These are two hugely different statements, and in my opinion, there is some very irresponsible reporting going on in the cryptocurrency scene.
While France is not a real “leader” in terms of crytocurrency trading volumes compared to other countries, it might not not be far-fetched to consider that the EU is probably watching closely to learn how to regulate the market across the whole of Europe. That however, is only really a concern if the “report” about banning cryptocurrencies was actually real.
I think that we need to be realistic about cryptocurrencies. Governments will look to regulate and they will look to tax. As a Bitcoin idealist, (and someone who has a large amount of contempt for overreaching governments and governmental branches) getting upset and jumping to the worst possible conclusion and selling all your cryptocurrencies in a panic because of one news story is likely to leave you with nothing more than a few Dollars in your pocket and regrets in six months time. My advice in any case like this, regardless of your country, is to wait and see. If your government makes an announcement, wait for clarity and then make a decision based on fact.
It’s Just That Time of the Year
I like this hypothesis most.
Every year, around mid January, Bitcoin prices drop. I can’t seem to figure out why, but it seems theres a consensus that the Chinese new year, and the weeks leading up to it seem to involve many withdrawals from miners in particular, to go all-out and celebrate. I cant confirm whether that is true, but I do have some interesting pictures to show you.
I personally feel like this is the most reasonable explanation, and I’ll be holding my position in all the currencies I’ve purchased. Ultimately the decision is yours, but please do remember that nobody made money by selling low and buying high, so take a breath, zoom out on your chart, and make the best decision for yourself.
As a bit of inspiration, I’ll leave you with one more chart image.
BTC all time chart
If you have any questions, thoughts or ideas, feel free to contact me on Twitter: @CryptTee