When does the bitcoin bear market take off?

In December 7th, bitcoin new lows for the year. According to Coinmarketcap data show that bitcoin plummeted to $3368, compared to last year about a record high of $20000 fell by about 80%. By the fall of bitcoin, other mainstream encryption currency have also diving, a large number of investors and the miners tragic bloodbath.

At the end of November, bitcoin prices had risen from $3447.58 to more than $4000 in reply. This is the signal some analysts as bitcoin bottom. Today, this view has been bitcoin below $3400 mark in the break, the bottom is still not in sight.

So, what is the root cause of the current round of bitcoin slump? Bitcoin bear when will it end? This paper analyzes.

Panic is the main cause of the selloff

The fundamental reason is that the recent bitcoin slump loss of investor confidence, the last straw is a BCH community led to disagreements is war.

Is war detonated bitcoin market panic. From the previous bitcoin price volatility, sharp decline in bitcoin stress often lead to confusion in the market, so many investors are worried about is war bitcoin stress will lead to loss of market chaos. While the market spread is both war may sell bitcoin holdings to raise funds that further exacerbated the market panic. According to Alternative.me data show that the stress on the eve of World War II market panic index plummeted, and in the subsequent three weeks has remained at 10-20, in extreme panic level. It is this extreme panic spread in the market led to a large number of bitcoin holders have to sell bitcoin, which triggered a cliff bitcoin slump.

In the crash, a variety of machine touch off price. Shutdown price refers to the price when the currency price is lower than when the running machine for income will not be enough to pay its consumption of electricity, which produces a loss. At present, S7 (4.05T), A741 (7.3T), M3+ (7.07T), underclocking version of T9 (12.5T) four mills has touched off the price, the mainstream machine S9 (13.5T) is also in jeopardy.

The price of the shutdown means that many miners were forced to close touch the machine, the whole network is triggered bitcoin fell sharply. You can see from Figure 3, bitcoin is in mid November after a clear downward trend, which is a significant signal. Since 2017, bitcoin has dropped by more than 80%, but the whole network is always a growing trend, indicating that the miners not because of the fall in prices and give up their value for bitcoin, bitcoin still have confidence. The stress drop during the slump, that some miners because the mining cost unsustainable, began to withdraw from the bitcoin market. The withdrawal of miners further exacerbated the market panic, making bitcoin continue to decline.

Bitcoin market short-term will not end

From the above analysis we can see that the main cause of the current round of bitcoin slump is lack of confidence in the market, incidents caused by panic, causing a chain reaction. Then the future similar incidents will cause another collapse? Bitcoin prices fell when the end?

To be sure, emergency similar stress war will occur in the future, but experienced a slump, the market panic eased slightly, unexpected events within a short period of time will trigger a new round of avalanche plummeted. Although bitcoin has no centralized mechanism of interference, but the common interests of the bitcoin community together, these bitcoin believers in order to protect their own bitcoin assets value, to price by buying bitcoin currency stability and market confidence. This is why this year 9 months, bitcoin can maintain for a long time in the $6000 support on. However, bitcoin bitcoin community order digestion ability is limited, the market is currently facing huge selling pressure, is expected to early next year will remain downward shock stage.

Long term, bitcoin market is still very fragile, the bear market will continue for a long period of time. The main reason before bitcoin rose several times in addition to people recognize the value of bitcoin, and speculators influx of bitcoin market factors. Because most of the public has been exposed to the concept of the block chain and bitcoin, the short term will not be the next wave of speculators caused by a large influx of rose. But in view of the global economic situation is not optimistic, monetary crisis may also cause some investors to buy coins for the purpose of hedging.

In general, bitcoin is not zero, it will not rise sharply in the short term. Therefore, with short-term speculative idea is not recommended to buy now, understand the concept of bitcoin and bitcoin value confident people can be considered from the beginning of next year will be bitcoin.

Source: Suning wealth of information; Author: Su Ning Institute of Finance trainee researcher Tao Jinghong

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