As you may know, on January 5th, 2017 Bitcoin price pumped up to $1166 / ¥8888.
Most traders were confident in the continuation of growth, as it overcame the previous maximum rate and trading volumes.
But, unexpectedly for the majority of users, BTC price fell for $300 on the same day.
What caused the sudden rate collapse?
Despite the fact that Bitcoin is a decentralized and independent currency, exchange rate is based on the supply and demand, and the majority of daily trading volumes (up 95%) occur in China.
During the rapid growth, PBOC (People’s Bank of China) warnings major Bitcoin exchanges.
PBOC suspected manipulation of market by exchanges and threatened by inspection, which caused panic sell for Bitcoin in China, which led to the rate fall from ¥8888 to ¥5000.
Many traders immediately left Bitcoin and began to predict a further decline.
For our team it was obvious that this news does not affect Bitcoin and the benefits that it brings to the market.
In other words, Bitcoin fell due to the speculative news, and its upward trend has not been broken.
The Chinese government has just tried to slow down a transfusion of capital into Bitcoin, by releasing a public statement on planned inspections.
Interestingly, after the news on found operational violations Bitcoin rate began its re-growth.
On January 22nd the leading Chinese exchanges OKcoin, Huobi and BTCChina announced the implementation of commissions on trading transactions with Bitcoin, which also had a positive impact on Bitcoin price, which continues to glide to $ 1,000.
The main purpose of this news is to convey to the traders the importance of correct information analysis. If the news is related to the technical problems in the cryptocurrency protocol, it indicates the long-term dump, and closure of position by large investors.
But if the news is purely political or speculative, be sure it is a short-term dump attempt, during which the whale is gaining a position before continuing pump.
This scheme is applicable to any large cryptocurrency and the competent information analysis helps to make the right strategic decisions.
We recommend beginners to learn to separate technical news from speculative and fix their profits on right time!
Sincerely, Ethtrade team.