January, a month traditionally bad for the crypto-currencies

The investors active on the market of crypto-currencies for several years and somewhat attentive will have noticed it : in the month of January, we are seeing traditionally to a correction more or less marked on the whole complex. If the edition 2018 has manifested a little later than in previous years, we are in the thick of it.

About traditional markets, it is called seasonality. For example, if you invest on the equity market in French, it is traditionally in April that the performance is the best, whereas it is in September that you might the more see the value of your securities decline. On the gold market, the precious metal has a tendency to appreciate the most in January and September, while in march it decreased further.

If factors that are concrete can be used to explain this seasonality in the equity markets (expectations and publications of the results of the companies) or on the gold market (periods of gold purchases in India and China), on the crypto-currencies, it is much more difficult to explain this trend, however, indisputable. Euphoria of the end of the year followed by a correction ? Period which coincides in some countries with tax (end of January) ? Self-fulfilling prophecy (to force know of corrections in January, investors are preparing for it by selling the currencies and, therefore, they materialize) ? Hard to say.

Crypto-currencies that tanguent in January : the previous

Currently, Bitcoin is trading around 11 000 $, after having reached almost $ 18,000 on 6 January. This corresponds to a decrease of approximately 38 %. How much are high previous corrections ?

Correction of January 2017

On January 5, BTC was trading at almost 1200 $. On January 7, it was around 830 $. After a rebound, another drop ran the crypto-currency to $ 750 (correction… 38 %). At the end of the year, Bitcoin flirtait with the $20,000 mark…

Correction Bitcoin of January 2016

On January 8, 2016, Bitcoin exceeded 460 $. 10 days later, it was worth more than 360 $, and then recover at a slow pace (correction of about 22 %).

Correction of January 2015

The correction of the first month of the year 2015 began very early, the price of Bitcoin was already on a downward slope after a high of a little over $ 450 to mid-November. In January 2015 the Bitcoin started the month at approximately 320 $. On 14 January, it had dropped to approximately $ 170 (correction of +- 45%).

Many did not see it coming, the crash of January 2018

Many investors have, however, been taken by surprise, including me. First of all, the crash took place late compared to last year. And given that we had already had a big correction at the end of December, some thought that the hammering of January was a little early. It should also be noted the contradictory messages of the Korean authorities. They do not help, and the more they are sometimes relayed incorrectly by some major media outlets (the prohibition of trading in anonymous, we announced the outright ban on trading, which has of course nothing to see). China also continues to take measures against cryptos, this time by forcing the hand to minors so that they déguerpissent.

The glass half-empty or half-full

Regardless of the explanation, this correction is very real. But we can see it in one of two ways :

  • It is a disaster, the value of my investments has dropped (and the pill is especially hard to swallow for those who bought at high levels).
  • It is an opportunity, I can spend on the purchase and take advantage of very low valuations.
  • The seasoned investors in the crypto-currencies have a tendency to see the glass half full, while the new ones see the glass half empty. This is understandable given that the first have been others, while the latter are literally terrorized (here’s how to survive your first correction BTC).

    It is true that the death of Bitcoin has been declared in many occasions. The beast has always eventually recover, stronger than ever. This is why the old have an unshakable confidence in the market, which could be a day fatal (see the fable of the boy who cried wolf).

    In conclusion

    Corrections severe are regular on the market of crypto-currencies, especially in January. Therefore, there is no cause for alarm beyond measure about the correction that we are experiencing, could continue. After all, the market has experienced a growth space during the month of December. Unless States take binding measures, the market should stabilize.

    Source : Boursorama : seasonality of equity markets, SafeHaven : the seasonality of gold, Graphs, Bitcoin