This Week In Cryptocurrency (1/26/2019)
Hello Everyone, and Happy New Years!
I know I know, “Really? Happy New Years 4 weeks post fact???”
Well, technically that depends on which side of the world you’re reading this on. As we are now approaching the 1/12th mark to our brand new year, our counterparts to the east will soon be preparing for the end of theirs.
For those of you who are unaware, I’m speaking of Chinese New Years which is rapidly approaching. This will mark the end of the year of the Dog and will be the beginning for the year of the Pig.
My initial thought was, “Pig….that sounds like pure greed to me” but I was wrong, well at least according to my Youtube/Wikipedia research results. I actually found that in Chinese Culture the year of the Pig is more associated with general wealth, rather than being directly correlated with greed… I’ll take it!
We will get right back to Chinese New Year’s and what it potentially means for Cryptocurrencies in just a minute but before we dive into that, I wanted to go over something new.
This year we will be beginning a new segment, A Monthly Featured Coin Profile, each of the coin profiles will be published on the last day of the month on our website. They coins that we will feature are going to be based on a point system from our weekly Winners and Losers articles, that can currently be found on our website.
It’s pretty simple, the coins you’ll see featured each month will be the coin that mathematically performs the highest over the previous 4 weeks, our first coin will be featured in next week’s newsletter. You’ll love it, you’ll see.
Okay now back to CNY!…
Over the past few years, I’ve come to believe that we’ve observed a nearly traditional global draw-down in Cryptocurrencies around this time of year, when said draw-down occurs someone is always quick to remind me, “Well it is Chinese New Years.”
The concept behind this statement being that during the weeks leading up and following CNY many families throughout Pacific Asia will be taking nearly a month off. This means they are going to need money, requiring liquidations to their investments, resulting in an overall global drop in Crypto prices, mainly because of China’s considerable market share.
Like many others, I’ve come to believe this as truth, mainly because I’ve heard it mentioned so often, and also it kind of makes sense to me.
So this year I was rather excited being that it’s the first year that I had found myself thinking of all this Pre-New Years. I enjoyed the idea of being able to be one step ahead of this more than likely pitfall and also being in a position where I could do some number crunching in hopes of spotting some type of pattern or consistency in the correlation of price movement and its relationship to the days surrounding Chinese New Year’s.
So I did my digging, and I must say, the results were surprising, and yet not so surprising at the same time. I wanted to make sure that I took the proper time frames into account, so after giving it some thought I decided on the following criteria:·
The start date would be set at 小年 or “Little New Years” which typically takes place around 7-9 days before actual New Year’s Day “春节” ·
Five Days Later marks the official end of the national holiday for China, it’s known as “Break Five” or 破五, this would mark a price point milestone·
The final checkpoint would be 元宵节 of “The Lantern Festival” which marks the official end of Chinese New Year’s by all accounts and takes place around 13-16 days after their actual New Year’s Day.
The entire timeframe from 小年 to 元宵节 can be as long 23 days so this would be the time frames covered.
For consistency we will only do the price of Bitcoin
So for example, this year Chinese New Year will occur on February 5th, so the time-frames that we would cover would be from January 28th thru February 19th, covering the buildup through dates when people will back home from their holiday and back to business as usual.
Below are the results, a breakdown of Bitcoin’s ROI from each Chinese New Years going back to 2014:
As you can see, there is no doubt a correlation, just not the one that was assumed. With the exception of 2014, the net ROI between the beginning and end of Chinese New Year’s is overwhelmingly positive!
It turns out a belief of an imminent draw-down looming with the approach of Chinese New Year’s couldn’t be more wrong.This further instills the lesson I teach and continue to learn myself which is when we are given information, especially in this type of environment, YOU NEED TO VERIFY IT INDEPENDENTLY!
This is true for this market, but especially in this one, and even more so for the times we are living in, the “fake news” era if you will. I never actually dug into the numbers because first, I was always getting this explanation post fact, and also I suppose the story behind the statement made sense. Asia, in many places, are still very much cash societies, and liquidating an investment to go on holiday fits right in with Asia’s culture, so of course, it drives the price down! Except it doesn’t.
Of course, this could just be priming me you for my next lesson of “Please Remember, Past Performance is not an Indication of Future Results” but let’s hope not.
However this does present a nice segue for what I wanted to mention next which is, draw-downs aren’t always a bad thing.
Okay look, I’ve actually been slapped in the face by crypto investors for saying that, so I understand if my comment just made you feel a certain way, but please allow me to explain…
One of the products that I’ve been developing over the past year, and hopefully, something that we will be introducing to our clients in the near future, is able to capitalize off of draw-down periods specifically, in the form of being able to acquire additional tokens, and no I’m not talking about mining.
I believe that risk mitigation of some sort is absolutely essential in a developing market such as this, and I look forward to providing something that can do this for you very soon.
I’ll save the details for another newsletter another week. In the meantime however, if this sounds like something that would be of interest to you and you would like to learn more before then, you can always request a consultation, and someone from our team will be more than happy to discuss any of our services with you, current or future.
Much like the Cryptocurrency market in general, our business is going to continue to grow and evolve throughout 2019, we are very excited for this upcoming year and where it will take us. We also genuinely value our subscribers and customers that will continue with us on this journey and through the development of this new asset class.
Good luck, and HAPPY New Years Everyone!
CCO of CryptoKnight LLC AKA IRA Bitcoin
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