Adjustment and fall: what happened in the worst week of the crypto market?

The cryptocurrencies went through this week their worst fall in the year. In a few hours, its value fell by 7% (in some markets it reached 14%) and marked one of the most important market tremors since its historic rise in December last year.

This movement was produced, according to specialists, by a strong quake in the New York Stock Exchange. In a few minutes, the Bitcoin fell from the $ 6600 that kept it stable in recent weeks to reach $ 6250, a figure that holds so far.

"No one knows exactly why the price of cryptocurrencies fall but it is speculated that a person - the famous 'whales' - entered and sold a significant amount of coins," explains Mariano Craiem, CTO and co-founder of SatoshiTango, the shopping platform and sale of Argentine bitcoins.

But Bitcoin was not the only one: Ripple fell by 14%, BitcoinCash by 13%, Ethereum by 12% and Eos by 11%. This caused the capitalization of more than 2,000 coins to fall $ 12,000 million in just half an hour.

The main markets that registered the declines were BitMEX, Bitforex and Bitfinex, all with a strong presence in Asia. Various reports claim that the Wall Street stock market had a significant impact, while massive sales of digital assets in South Korea and Japan were completed, a statement that coincides with the version of Craiem.

Likewise, the analysts of Link Securities blamed "the instability of Washington, the tension between the United States and China, the slowdown in world economies, the rise in the price of oil, the political uncertainty in the Euro Zone, the weakness of some economies Emerging markets and the proximity to the quarterly results season ", as the factors that were conjugated as triggers of the fall.

"Although it has to do with the political situation, the most important thing is to understand where investors fit this type of asset today, since it is something totally new and feels more comfortable comparing it with something known," explains Alberto Vega, manager Regional BitPay.

Also, the slow formation of a regulatory framework made the consolidation of the BTC even more difficult. "Despite this, if we look at investments in the industry we see that the price fell sharply but the companies in the ecosystem are valued," adds Vega

But not everything is a dark scenario. The CTO of SatoshiTango described the fall as "one more" and expects the market to stabilize shortly. Also, the recent arrival in Wall Street of virtual currencies in August - with the Intercontinental Exchange, the group that owns the New York Stock Exchange (NYSE) and Starbucks - denotes a growing interest in the traditional market to embrace these modern financial tools. .

Downtrend or rebound effect?
On repeated occasions, the end of the year (or Q4) was a great moment for Bitcoin. And you do not have to go far to prove it: Last year, the digital currency reached its historic peak when it reached US $ 19,783.21 on December 17. In the following days, it began to fall, until reaching $ 15,000. However, during the rest of the year the currency had a downward trend.

"Many cryptocurrencies have returned to the point where they were at the beginning of November last year, shortly before the rally, when there were huge profits," explains a recent report by The New York Times.

At the same time, it is highlighted that the collapse of this year could have a more profound impact than all the previous ones, due to its sustained effect over time and the number of people who were harmed by its decline: "it is likely that many associate the cryptocurrencies with financial ruin ".

In spite of that, the closing of the fiscal year and the beginning of a new quarter seems to be the perfect scenario for a new jump or the famous "rebound effect"."The last quarter of the year is a special moment for bitcoin. Many years there are increases, but there is no rational explanation, "explains Craiem and adds that the arrival of half of the year in the northern hemisphere, where the largest volume of cryptoactive concentrates, has much to do with this. Therefore, when September arrives and the commercial year begins in Europe, Japan and the United States, the level of speculation increases more than at any other time of the year.

With all this movement, there is a fact that we must not let go. CoinTelegraph said in a recent report that the volume of operations has been plummeting from US $ 3,700 million to US $ 670 million during the first six months of the year, which marks a real slowdown in the market.

But this has nothing to do with "fashions", as the director of consultancy Simon-Kucher Manual Pingarrón describes, but it is directly related to the oldest market concept: supply and demand. "The offer is increasingly scarce as cryptocurrencies are limited," he explains.

"There is no magic formula that says when the market is going to be consolidated, only expectations, from the inside we see that a lot of value is being created that was not reflected in the price," says Vega.

With a turbulent week to its credit, cryptocurrencies seek to find again the balance they knew how to maintain in recent weeks. Despite this, experts believe Bitcoin could continue its decline and even break the $ 6,000 barrier and then stabilize at a value close to that figure.

Looking to the end of the year and the beginning of 2019 is expected to reach the "promised land", where everything will depend on the position taken by regulators. "In the short term, the real question comes not so much by price, but how they can increase the cases of use", ends the BitPay manager.

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