New York blockchain startup Chainalysis analyzed the causes of more than three falling bitcoin prices at $20 000 to $6 000 in the report “the Great fall of bitcoin and what lies ahead”.
In Chainalysis sure that the mass sale of bitcoins was provoked by tough action from regulators at a time when the bitcoin price pushed up only positive attitude of investors is not backed by fundamental drivers. As a result, this led to “herd behavior” on the growing correlation between different exchanges and cryptocurrencies.
“Traditional markets have a number of fundamental indicators that investors understand and assess price fluctuations and changes in trade volumes. The cryptocurrency industry is still undecided with the fundamental values in the periods of high volatility”, the report says.
Analysts startup also pointed to the fact that the number of search queries on Google has grown faster than the price of the first cryptocurrency, bitcoin, therefore, could not long maintain the “insane” an upward trajectory.
“Fondova the market the normal correction is 10% and a bear market is 30%. The price of bitcoin has fallen by 70% as of February 6”, — the report says.
In December 2017 and January 2018 the volume of trading on various platforms have started to almost completely correlated — what happened on one exchange immediately repeated on another. If “whales” on one platform started to sell, it was everywhere.
In December the investors were buying more crypto currency than sold, which led to a sharp gap between demand and supply. So, the market could keep prices high, considering the circumstances, sure Chainalysis.
In addition, the prices of bitcoin and altcoins also showed an increased correlation, leading to a similar downward movement of all cryptocurrencies.
We will remind, in the report of the company Fundstrat Global Advisors says that currently the cost of mining one bitcoin is almost equal to the rate of the first cryptocurrencies.
In Fundstrat estimate three indicators: the cost of equipment for mining, electricity costs, and overhead costs associated, in particular, maintenance of cooling systems.