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Why cryptocurrencies fall …

In all the markets of the world, the low and rises in the assets is something very natural. There are many factors involved in this phenomenon, in the case of cryptocurrencies, this fluctuation is more volatile than normal, something that in turn is understandable, for a market that barely started in 2009 with the creation of Bitcoin, on the part of of Satoshi Nakamoto.

The performance of the cryptocurrency sector during the year 2017 was phenomenal, although the same has not happened so far in 2018, the cryptocurrencies have had a strong collapse, which has been difficult to trace, why is this? , What are the factors that intervene in this phenomenon?

When a well-known company is associated with a cryptocurrency, this news usually causes some kind of repercussion in the markets, in this case it is usually a positive impact, but when it is a rupture, it causes the opposite effect, a decrease in the value of cryptocurrencies, since it is a matter of trust, confidence is given and trust is removed, and when cryptocurrencies are backed by recognized companies this becomes a source of confidence for the investor.

Now, imagine the impact that could have the political measures taken for or against a government with respect to cryptocurrencies. These facts are positive or negative, should not necessarily determine the fate or future of an asset, but it is something that is unfortunately happening, this news ignites the alarms of investors and operators of cryptocurrencies, why? Simply because this is the game of investments, that which is behind the markets and economies of the world.

Parallel to this, the social media, is there to replicate any type of information, whether this is positive or negative news, and of course, the media end up playing an important role for the cryptocurrency markets to rise or fall in value, that’s when we begin to see the percentages in green or red, happy faces and long faces.

Now, when the percentages are in red, this in turn creates a kind of panic in the markets, and consequently the inhabitants account begin to sell their assets, a fact that only aggravates the situation, which could be handled by a normal way and not necessarily have such a negative impact. And less, in a cryptocurrency like Bitcoin, which in the long term, always has an upward trend. This also reveals to us that there is a worldwide disinformation regarding cryptocurrencies and their behavior, something in which the community should work to strengthen the market.

This, is in part the phenomenon of what has been happening since the beginning of 2018, and the version that runs through most of the media is that all this decline in the values ​​of cryptocurrencies has its cause in what has It has been happening in South Korea and China, which is not surprising, since Asia is the most influential continent in this sector, both culturally and economically.

At the beginning of 2018 in South Korea there have been a series of political events regarding cryptocurrencies, which has not only affected the market of this country, but along with other factors has ended up destabilizing the entire cryptocurrency market at scale world, and this why? This is because South Korea and Japan have become the most influential markets in the cryptocurrency sector, and especially in Bitcoin.

It all began with a misinformation, and a series of speculations that were raised for weeks in South Korea about the government’s position on the cryptocurrency trade in that country.

First, a South Korean official from the Ministry of Justice made a general statement suggesting an imminent ban on the cryptocurrency bags in the Asian country, which caused widespread nervousness in the market. As soon as that statement was issued, the Ministry of Finance of South Korea downplayed the claims and said that “no agreement had been reached for a total ban”, undoubtedly an attitude that could only generate uncertainty. Three weeks later, the South Korean Finance Minister, Kim Dong-Yeon, made it clear that the government would not institute bans, however, for public opinion the wrong was already done.

What is clear is that the government of South Korea, is developing a legislation on cryptocurrencies, which will legitimize the exchanges, however, this ordinance will stipulate that financial service providers, foreigners and underage investors will not be able to trade in the South Korean stock exchanges. Cryptocurrency traders can no longer operate anonymously in South Korea, and must have verified bank accounts linked to the stock exchanges in order to apply.

Apart from this situation in South Korea, which has negatively impacted the cryptocurrency market, the Xataka web portal ensures that: “China is also proposing new measures against these markets. One of the directors of a banking entity has indicated to the government that it prohibits the centralized exchange of virtual currencies, and prohibits people and companies from offering services related to that activity. “

And something that seems to confirm this version, is that by February 5, 2018, the portal Cointelegraph cites the South China Morning Post statement:

“To avoid financial risks, China will intensify the measures to eliminate any platform on land or offshore related to virtual currency trading or ICO”, in the same line it states that “The ICO and the cryptocurrency trade did not completely withdraw from China after the official ban … Foreign transactions and regulatory evasion resumed … The risks are still there, fueled by illegal emissions and even by fraud and the sale of pyramids. “

That is, it is very clear a scenario of attempted control, by the South Korean and Chinese government, but we must also admit that investors in cryptocurrencies, taking advantage of market distortions, bought Bitcoins at their standard price, and then sold them in the market of Surcorea, where the Bitcoin was priced above normal, that’s the profit, it was something that was generating a kind of vice, which was not going to bring any good results for the cryptocurrency community on a world scale, and especially Bitcoin.

In this same line, the Xataka portal refers to the fact that bans on cryptocurrency operations have been confirmed in nations such as Indonesia, and regulations in France, which although they represent small markets in comparison with South Korea, are still relevant when considering all this bite that the cryptocurrencies have had in 2018.

In conclusion, that panic that was generated in South Korea, term to affect and expand throughout the world, immediately after, the inhabitants of cryptocurrencies began to sell their assets, a situation that only aggravates the situation, this In addition, the intentions of deepening the bans already existing in China, and those that are initiated in Indonesia, as well as the regulations of France.

All this adverse phenomenon reveals the lack of understanding that many users have about cryptocurrencies, a training topic that has to be worked on a global scale, because it is not a financial market, fictitious or unpredictable, quite the contrary, a very reliable, thanks to elements such as decentralization and technological benefits based on Blockchain technology, technology that stimulates security, transparency and trust.

Although with many cryptocurrencies such as Bitcoin and Ethereum, the financial decentralization of governments, central banks and private banks has been achieved, the steps that still have to be taken must be oriented towards achieving the decentralization of the next level, that is, the decentralization of the panic, ignorance, and dependence on markets as influential as South Korea, Japan and China, just to name a few, this is the only way that the cryptocurrency community can achieve true and fair economic stability world.

By Marcelo Durán / Bitdharma