Bitcoin’s fall is not unknown to people by now. Last year December, it was found to surge high up and reach the $20,000 mark but has dropped as low as the $6,000. The only question investors and bitcoin fanatics have in mind, is to know what was the cause of such volatility? Chainalysis has provided with some data which might unravel the issue.
Chainalysis consists of a group of researchers who analyzes the blockchain trends and untangle the data to follow up with a conclusion. The team has recently reported a study regarding the bitcoin drop down. “The Great Bitcoin Price Dip: Its Causes and a Way Forward” was the report produced by the team which looks over the BTC statistics and deduces a conclusion.
As per reports by Chainalysis, the December bitcoin phenomenon was a consequence of “Regulatory news driving trading volumes and a peak of positive sentiment pushing price; and a lack of fundamentals resulting in herding behaviour across increasingly correlated exchanges and cryptocurrencies”.
Chainalysis understands how difficult it is to value bitcoin and states, “Traditional markets have an established set of market fundamentals that help investors understand and contextualize price and volume fluctuations. The cryptocurrency world is still figuring out the correct fundamentals to use in situations of massive price volatility”.
After the unbelievable success of Bitcoin during the end of 2017, countries started initiating the process of regulating these coins. The sell of Bitcoins was largely affected after China put a ban on bitcoin. Bitcoin soon came back to track and the insane surge had to face repurcussions.
Bitcoin prices fell down by 70% between December and February.
Chainalysis concluded that regulations are responsible in driving the market. Some very fascinating data have also been given in the report which shows the market trends even better. They also stated that since the “supply was increasing at a greater rate than demand, and therefore the high price levels could not be sustained”.