Bitcoin has prided itself on not being moved by the normal market manipulators, such as global strife and socioeconomic activities. However, there are times when it fluctuates for obscure reasons.
According to some experts, the January downturn could be no surprise as he attributes it to the Lunar New Year and the significance it carries for the Chinese.
The lead up to Chinese New Year is one of high spending as people book all sorts of travel and holidays, not to mention buy presents. Thus, just like Christmas and December is a time for spending in the West, January has a similar pattern in the east.
Blame it on the moon
With Bitcoin’s value almost halving from $20,000 in the middle of December to $10,000 at its worst in January, Wallin is both unperturbed or surprised.
“The January drop is a recurring theme in cryptocurrencies as people celebrating the Chinese New Year, aka Lunar New Year, exchange their crypto for fiat currency,” explains Alexander Wallin, CEO of trading social network SprinkleBit, as quoted by Bloomberg.
“The timing is about four to six weeks before the lunar year when most people make their travel arrangements and start buying presents,” he added.
The holiday takes place on Feb. 16; however, the build-up is where people start to spend their money. And with the Chinese population heavily vested in Bitcoin, it has a huge role to play on the movement of the market.
The thoughts are that people have been taking their profits into the build-up of the New Year, turning their Bitcoin into fiat currency to use for gift buying.
Strange effects
Bitcoin is steadfast in the face of other market influences, the likes that are seen to disturb the traditional stock market, etc. But this theory, if it is to be believed, highlights the way in which Bitcoin moves separately from other assets.
In August, when tensions between Donald Trump and Kim Jong Un were reaching a fever pitch, the entire global market fell by an average of one percent. However, Bitcoin was one of the only assets to report growth during that period.