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The cryptocurrency market dawned in a red sea of ​​prices after a booming period that was being compared to the 2017 bullrun. Bitcoin lost $ 3,000, about 15% of its value, most cryptocurrencies had the most significant declines in about 20%, but why did this drop occur? Understand the main reasons.

1) Bullrun volatility

Bitcoin price in the 2017 bullrun. Source: Tradingview.
Bitcoin price in the 2017 bullrun. Source: Tradingview.

Both the 2013 and 2017 rallies took place amid strong price corrections of more than 30% of the cryptocurrency's value, and this time the same scenario seems to be forming.

It is worth mentioning that Bitcoin's volatility in this price rally is lower than in previous years. Part of this can be credited to the entry of institutional investors in this market. These types of investors tend to allocate resources over the long term, being much less emotional than retail investors.

Finally, this correction can be considered completely normal and expected, and given the greed index that accumulates 93 points, a new price correction is possible. But it is not possible to say with certainty, since the scenario of this Bitcoin bullish season is noticeably different than that of 2013 and 2017.

Black Friday Coingoback

2) Regulatory rumors

Brian Armstrong, Coinbase's CEO, threaded Twitter talking about rumors of regulation in the cryptocurrency market before the end of the Trump administration. These rumors may have affected the price of these assets.

Read more: Bitcoin price drops with rumors of heavy regulation in the U.S.

3) At $ 20,000 everyone can make a profit

$ 20,000 is a strong point of resistance for Bitcoin, it is very likely that many people who bought these crypto at the high of 2017 want to dispose of their investments. So the vast majority of people who waited long enough made a profit.

4) Fear vs greed

The indicator that measures greed and market fear was pointing to a scenario of extreme greed for almost a month. At this point, a market correction is normal and expected, as with a sharp increase in price, many investors see an opportunity to make a trade and profit from the operation.

Bitcoin market fear and greed index. Source: Alternative.me.
Bitcoin market fear and greed index. Source: Alternative.me.

The behavior of the crypto market is very emotional. People tend to get greedy when the market is rising, which results in FOMO (fear of losing). In addition, people often sell their coins in an irrational reaction to seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional reactions, says the website.

Despite the correction, the greed rate dropped by just one point, indicating that another correction may lie ahead.

5) OKEx resumes withdrawals

The exchange OKEx, one of the leading companies in the eastern market, had suspended withdrawals from the broker after the company owner was allegedly arrested. At the time of the incident, there were about 200,000 bitcoins in custody at the exchange.

Withdrawals from the brokerage normally returned today, November 26, and about $ 50 million has already been withdrawn. These assets were, until then, in a type of forced hold. Once the broker has released their withdrawals, part of the holders of cryptocurrencies and tokens now have the option to sell them, especially at this time with the profit realized in recent weeks.

Read more: Rio de Janeiro is the state that does the most research on the “darknet cryptocurrency”


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