The cryptocurrency market, being a relatively young and small one, is frequently affected by external forces. Sometimes, one of those factors could sound a bit strange on the surface, but it could deliver a severe impact. It’s the Chinese New Year.
The Holiday is taking place during the next weekend, between January 25th (Saturday) and 27th (Monday), a quick look at the Bitcoin’s longer-term price chart can reveal this occasion had a tremendous Bearish effect on the price of Bitcoin over the past years.
Chinese New Year: Negative Impact On Bitcoin Price
History is not indicative of future results, and should not be taken as science, especially in the extremely high volatile cryptocurrency market. Yet, one shouldn’t also ignore the fact that over the past years, we had seen a constant price drop during the week of the Chinese New Year holiday.
Whether it’s a relatively minor price drop (8%) as it was in 2016 or a huge (50%) during the formation of the 2018 Bearish market, the conclusion is clear. The latter was also particularly hurtful as it came just a few weeks after BTC reached its all-time high of $20,000.
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In the other two mentioned years, 2017 and 2019, the largest cryptocurrency noted around a 20% decline during the holiday.
China And It’s Major Effect On The Crypto Market
The Chinese New Year is not the only thing coming from the country that has had a significant role in regards to the cryptocurrency prices. This has been true especially between the years of 2014 to 2016, where China dominated the Bitcoin trading, but it’s also true today.
Last November, China’s President Xi Jinping urged the country to start utilizing more blockchain. The market accepted his words as a cryptocurrency adoption, and Bitcoin recorded a 42% daily surge, which was the highest daily percentage increase in eight years and the highest price of Bitcoin over the past six months.
President Xi’s words also had a significant effect on most Chinese-based crypto projects. However, this positive vibe in the nation didn’t last long, as officials quickly clarified that cryptocurrencies are still illegal. Moreover, the country said that it wants to adopt only the technology and pushed its “Blockchain, not Bitcoin” narrative even further.
The effect was instantaneous again, but this time it headed south. Bitcoin, for instance, started plunging almost immediately and noted its 6-month low.