Bitcoin Drops, But Investors Are Encouraged to Hold

Bitcoin, along with many of the other cryptocurrencies, has witnessed a dramatic price drop Friday, with Bitcoin losing almost 50% at its lowest compared to the $20,000 high it had achieved at the beginning of the week. Currently, the coin’s price has readjusted to $14,860 since falling, so already it looks to be in a recovery phase – and this is what many analysts are focusing on and using to keep the calm among the crypto investors.

Many analysts are encouraging investors, especially new-to-the-block investors, not to panic about the price drops and to hold onto their coins. A correction was bound to happen eventually; a thing can only go up so much before it needs to come back down a little, and these types of things happen all the time with market trading. This isn’t the first time the digital currency has dropped in market share (and it will no doubt be the last); at the end of the summer, the cryptocurrency saw a dip after increasing for many weeks. Many analysts, including Alan Silbert, who has long been versed in the crypto-sphere, believe that this is the correction that was expected, but that cryptocurrencies will recover.

What could be causing the drop right now? It could have something to do with the launching of the Bitcoin futures contracts. Through those contracts, investors are able to short on Bitcoin, meaning they can bet against it essentially. On December 10, Cboe (NASDAQ:CBOE) launched its futures contracts, which was followed a week later on December 17 by CME (NASDAQ:CME) in its launching of its Bitcoin futures contracts. Both did exceptionally well, with the Cboe launch pushing Bitcoin 19% higher. Initially, the future contracts would cause Bitcoin price to increase, as an extremely high amount of people are trading or betting on it, but as that slowly begins to wear off, and people sit back to wait and see where their bets will land, Bitcoin’s price is going to be affected. That looks like what we’re seeing a bit of now.

It could also be the time of year. ‘Tis the season, but maybe not for Bitcoin.

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