Chinese New Year And Bitcoin Price History: Is Bitcoin going to fall in 2023?
With the knock of Chinese New Year at the door, Bitcoin is already showing signs of ups and downs to follow. History depicts that the price of Bitcoin decreases in the month of Chinese New Year. That said, we all know that Chinese New Year is based on the Lunar Calendar. That’s why it is celebrated on different days.
This Chinese New Year festival is on 22nd January 2023 and is a year of rabbit.
During the time, many consecutive services remain closed, which leads to high volatility in the cryptocurrency.
That’s why in this article, we’ll explain the trends and falling of the Bitcoin prices and why it happens. So, let’s start.
What we are going to learn?
Chinese New Year: Does It Lead To Dump in Bitcoin HODLing?
When it comes to the volatile cryptocurrency market, we cannot decide whether the Bitcoin prices drop or fall. However, we cannot ignore the historical fact about cryptocurrency; we’ve seen the constant price dropping in the Chinese New Year holiday weekend.
This effect has often been termed as to be the opposite of the “Santa Claus rally”. In the case of a Santa Claus rally stocks markets and their performance seems to rise exponentially during the month of December. However, the contrary is true in the case of bitcoin and the Chinese New year, where, as the festival approaches, during the end of January or the start of February we see the price of bitcoin fall and be affected negatively. There are many factors like cashing in around holiday time, gains in February, Government regulations, BTC news in China, and other factors that additionally affect the price around this time.
Many popular exchanges like Binance, Huobi, and OKEx which also cater to Chinese users, have witnessed a drop in trading volumes around the Chinese New Year. According to Boxmining.com, “When large numbers of highly leveraged traders all bet on Bitcoin prices moving one way it creates an opportunity for other large investors (whales) to move prices in the other direction. Doing so triggers a cascade of liquidations, sending Bitcoin’s price into free fall and creating huge paper losses for leveraged long traders. The whales are then free to “buy the dip” at the expense of “rekt” traders.”
Chinese New Year and Bitcoin: 2016
Chinese New Year and Bitcoin: 2017
No matter, whether it’s just a small drop of around 8% in 2016 or as major as 50% in 2018 during the Bearish market formation.
Even in 2017, before the Chinese new year, we saw a dump in the Bitcoin price.
Chinese New year 2018 was on Feb 16, and we saw a major drop before that and it took more than 2 and half years to recover from the jolt.
So, it is clear that for four consecutive years, the price of Bitcoin drops during the Chinese New Year.
Chinese New Year and Bitcoin: 2019
For instance, in 2019, the BTC price significantly dropped from $4000 to $3350 before the Chinese year.
What happened to Bitcoin during Chinese New Year 2020?
Similarly, in 2020, the BTC price shows the same declining pattern during the Chinese New Year festival. The drop was so breaking that it also broke the confrontation of the USD 8.3K. However, it readily reached the USD 8.5K within the first week of the Chinese New Year.
Although, the history has repeated itself, and its decline back to USD 8.3K. But the prices remained stationary during the Chinese New Year’s second day. The good news is it recovered and followed the upward trend as soon as the Chinese New Year fest got over.
What happened to Bitcoin during Chinese New Year 2021?
2021 seemed to be slightly different for the Bitcoin market with respect to the Chinese new year. We witnessed an eventual and small increase in early February. This rise was from $32K to $39K USD along with a massive 2-day rally that reached up to $48K as the days approach the Chinese New Year.
However just like the ongoing trend, after the festival Bitcoin prices saw a significant drop. However, it was not as terrible as before and as the prices again began going back to $46.2 K. After the festival, the gains and rally of prices that occurred, it wasn’t completely erased.
Studying the past we can figure that it is not really on the Chinese New year’s day, but in fact, many days before the actual festival day when the price of Bitcoin starts falling. In 2021 analysts noticed no such trends prior to the festival that could signal a Major Sell-Off For Crypto Industry. Most coins looked bullish and this was expected to continue for a few more weeks to come.
What happened to Bitcoin during Chinese New Year 2022?
2022 overall was quite a catastrophic year for crypto in general. However earlier this year, bitcoin prices were not as drastically affected by the Chinese New Year as it was in the past. The price fell from $41K to $37 K in the days leading up to the festival. After this, the price saw constant fluctuation throughout February, where it kept oscillating anywhere between $42K and $37K approximately.
How will Bitcoin behave in 2023 and will it be affected by the Chinese New Year?
As a consequence of everything that transpired in the crypto world at the end of 2022, a conversation has begun about what to expect from bitcoin in 2023. While there are not many active views on what impact the Chinese New year of 2023 will have on the price in, there is a general sentiment that there are several other factors that will weigh in on the value e of the coin much more than the festival.
Many expected the last few weeks of December to be promising owing to the Santa Rally but unfortunately, it did not have any significant impact and the markets were mostly steady during the holidays.
According to an article published by CoinTelegraph, “exchange outflows have now hit their lowest levels in over six months.
After seeing an overwhelming surge in light of the FTX meltdown, BTC withdrawals from exchange wallets have entirely reversed the spike, which began around six weeks ago.”
Market Influencers on Chinese New Year Holidays
There’s no hidden secret that the market influencers and the trading bots remain as the main operator in the cryptocurrency market. Perhaps, they are the pillars of the cryptocurrency and the rise and fall in the market volume.
Due to the Chinese New Year holidays, Asia’s market makers, especially China, will shut all the operations for three to five consecutive days. Although the cryptocurrency and the market assembly can be automated by algorithms and by trading bots, still, it requires the manual eyes to watch out the daily market exchange operations to ensure that there is no malfunctioning happening in the market.
So, due to the closing, marketing operations are limited, leading to the more volatile market.
Cash-Out during the Chinese New Year
Another possible reason for BTC price fall is the marketers withdraw the maximum cash during the Chinese New Year. It happens especially in China because, during the New Year, the lucky packets with some cash are given to the elders and children as part of the tradition. The red packets are the symbol of prosperity and luck, and this is the high time when marketers withdraw cash from their cryptocurrency account. This leads to a rapid decline in the BTC price during the Chinese New Year. You can read about it more here.
From employees to companies’ managers and even the couples, people give cash to their assistants. At the same time, some gift packets are filled with the monthly wages of the employees. Due to colossal cash demand, some marketers are also responsible for raising the BTC sell orders before the Chinese year, as shown in the figure.
Bitcoin Mining is Unpretentious
China is the significant contributor to Bitcoin mining. So, one can have the expectation that the BTC will be affected during the Chinese New Year. But this is not true because the BTC and Hash rates will hold the steady position this time. Because the BTCF mining will not require any significant manual power to maintain the Hash-rate, the operation will remain the same.
It has been stressed several times by experts and analysts that crypto and in turn bitcoin is an extremely volatile asset market. It is sensitive to influence by many social, political, environmental and pop culture factors. While we do expect the Chinese New Year to have some effect on the prices, nothing can really be said with complete assurance and hence it is important for you to make an informed decision. You are strongly advised to DYOR and then take a call. Crypto is very uncertain and things can change at any second. Keep yourself updated every moment. You can expect some volatility, going ahead. You must remember that the key to good investments is that they must be baked by impeccable research. You must leave no stone unturned in learning more about where you wish to invest your money.
Share your thoughts on what you think is going to happen during 2023 Chinese new year and how it is going to affect the Bitcoin’s price.