The cryptocurrency market had a superb 2017, with huge price rises registered by many of the leading coins. However, this exponential growth was often been interrupted by sudden falls, particularly in the wake of negative news from around the world about restrictions and regulations affecting Bitcoin and ICOs (Initial Coin Offerings). That’s why choosing the right cryptocurrency to invest in isn’t always easy for newcomers.
The recent drop in crypto prices shouldn’t be off-putting for traders, as all assets rise and fall, and price corrections are normal after periods of pronounced upward movement. Various cryptocurrencies brokers worldwide offer the opportunity to trade many of the world’s newest and most popular cryptocurrencies. For example, cryptocurrencies trading platform UFX is one of the most successful in the online industry, and has earned a rock-solid reputation by offering its clients the very best trading conditions, including tight spreads, a range of different accounts, flexible leverage options, and cutting-edge technology that delivers real-time updates on all the latest developments.
As the digital currencies market is still relatively new, not all the factors which drive prices up or down are fully understood, but some of the reasons for the recent crypto price drop have now been identified.
A market correction phase is normal after a period of euphoria
When an asset’s price experiences a phase of strong growth – at least 10% over a period of 52 weeks – a market correction is to be expected. Last year, altcoin markets recorded a string of record highs, and a correction was seen by many analysts as long overdue. Investors often seek to secure their gains by closing their bullish positions, and action by a relatively small group of traders can trigger a much wider sell-off, due to market psychology. Market corrections, however, are often temporary, as many traders then take advantage of lower prices to enter the market and invest in assets that they believe in.
More regulation governing the use of cryptocurrencies, ICOs, and trading
News from Asia often influences the digital currency markets, and for good reason: the Far East is an important cryptocurrency hub, hosting many of the most powerful mining pools and exchanges. Last year, China decided to ban ICO trading, which triggered a global sell-off as many people simply decided to move their money elsewhere, before the markets stabilised and rallied once more. Any news regarding tighter regulation of cryptocurrency trading or ICOs is likely to negatively influence the market, at least in the short term.