Major social, economic or political events in the world are factors that tend to influence the variation in the price of bitcoin. Hence, it is considered a volatile asset. The celebration of the Chinese New Year is one of those events of the year, which is believed to affect the price of the cryptocurrency.
The beginning of the event coincides with the phenomenon of the new moon that occurs between the months of January and February due to the fact that the Chinese calendar corresponds to the lunar cycles.
This 2021 the celebration occurs from February 12 to 15. For Chinese culture it is a very popular event, characterized by being the time when millions of Chinese go on vacation and travel to meet family and friends. In fact, this mobilization is considered the largest annual migration on the planet or chunyun (spring transport, in Chinese).
Another of the customs that the Chinese have, in a time that resembles Christmas for Western culture, is to give money in red envelopes as a symbol of prosperity and good
On the influence of this event on the price of bitcoin, the vice president of cryptocurrency wallet Cobo, Alex Zuo, explained that Chinese merchants “tend to withdraw their crypto assets and collect cash. during this time. It’s akin to the way people in the United States profit from stocks before Christmas. ”
Likewise, users of the Bitcoin Talk forum discussed the issue in 2018 and related it to cryptocurrency mining. They indicated that the end of the Chinese year would have “a small impact on the price”, since the miners sell assets such as bitcoin.
Another aspect that has possibly influenced the market is that, being a moment of celebration in China, the miners also decide to make a stop in their activities, so that the Chinese over-the-counter (OTC, for its acronym in English) ) also close. This generates volatility in the price of cryptocurrencies, according to the Boxmining medium.
According to the bitcoin mining map, designed by the alternative financial center of Cambridge, the Asian giant remains the first place , with 61% of the average monthly hash rate (processing capacity) in bitcoin mining.
However, this is something that may change in the coming years, if miners migrate to countries like Russia, the United States or Iran, such as It has been reported in CriptoNoticias. This, due to the more severe regulations of the Chinese government , the increase in inspections by the authorities and a lower production capacity of equipment manufacturers. All these actions put pressure on the miners.
By making a detailed review of the market movements during the days prior to the Chinese New Year of the year 2017, it can be identified that, by January 3, that year, BTC surpassed the all-time high (ATH) it had at that time, surpassing USD 1,000. Then during the Chinese celebration, which began on January 28, bitcoin fell to USD 914, which represented an 80% drop.
A similar situation arose in 2018. During the holiday, the value of bitcoin passed from USD 9,741 to USD 5,947, a 61% drop in the price of the cryptocurrency.
The year 2019 was no exception for what would be a “normal” behavior of bitcoin during the months of January or February, on the dates of the Chinese New Year. On that occasion, the price of bitcoin fell to USD 3,358 from a seasonal high of USD 3,646.
With a bitcoin above USD 9,000, the year 2020 arrived and January 19 , six days before the Chinese New Year, the price fell to USD 8,610.
The scenario set for that year changed with the appearance of the coronavirus, which spread from China, where the outbreak began at the end 2019. The holiday was interrupted by the quarantine in that country, so there was not the expected mobility. Then, governments in several countries of the world confined their citizens and the cryptocurrency market did not escape the onslaught of the pandemic.
On March 12, bitcoin lost 40 percent of its value in 24 hours, leading to the so-called «Black Thursday».
Will the “tradition” be fulfilled in the Chinese New Year 2021?
This year the outlook has changed for bitcoin and for everyone who has invested in the cryptocurrency. Although the coronavirus continues to affect a large part of the world population, the impulse that institutional investors have given it when entering the cryptocurrency market, has increased the value of BTC exponentially.
A clear example of what these investors can do is the effect caused by the decision of billionaire Elon Musk, who through his company Tesla invested more than USD 1.5 billion in BTC, taking the value of the cryptocurrency to a new all-time high of $ 48,000 . This, a few days before the Chinese holiday.
The Chinese New Year begins this February 12, and analysts still do not observe any effect of this annual celebration in the bitcoin market. To confirm this approach, they highlight the fact that the price has risen significantly on the eve of the event .
Jake Wujastyk, chief market analyst of TrendSpider does not believe that market volatility can be attributed to the Chinese New Year. “It is natural to be attracted to a fabricated attribution, but in this case the price falls it is simply normal behavior after a great run,” the analyst told a Chinese media.
For Wujastyk the reasons that really influence the rise or fall of the price of bitcoin, are related to the printing of money by the Federal Reserve of the United States, as well as other banks Centrals that have taken on the task of printing money and keeping interest rates low.
For his part, the CEO of GoCoinstream.com, Michael Vogel, considers that, although it is true, there has been a decrease in the price of bitcoin in recent years during the Chinese New Year celebration , the trend is conservative so cannot be said to be a natural market behavior.
Vogel argues that miners “have weathered bear markets in the past and it can be challenging to remain profitable, depending on the size and cost factors of the operation.” The executive also says that the costs of electricity, mining equipment and the rest of the expenses that can be generated by maintaining an infrastructure of this type “must be paid in some way.”
For the media specialized in China’s bitcoin, 8BTC the cryptocurrency market has reached a point of maturity, not being fully stimulated by China, despite the fact that it remains a leader in the sector of cryptocurrency mining.
The wide adoption of the valuable currency in other countries is what balances the balance. Some analysts argue that the influence of the holiday will not be strong this year because institutional investors in the US and Europe have been the main drivers of the current bull run. That contrasts with the bull market of other years, strongly driven by retail investors in Asia.
They thus consider that the Chinese New Year will not affect the prices of cryptocurrencies, especially the value of bitcoin.
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