Bitcoin & Ethereum- WHY THE RECENT DECLINE?

To understand why we are experiencing the recent dips in these cryptocurrencies, we must first understand who is 'funding' them?

Soo who is behind cryptocurrencies?

Surprisingly enough the U.S. Dollar (USD) had the majority of the Bitcoin volume from 2012-2014. Then their trading volume dwindled and was replaced with the Chinese Yuan (CNY). The CYN held the majority of Bitcoin exchange from 2014 to 2017. In January of 2017, there was a major influx of Japanese yen (JPY) that joined the market. Following this increase was the return of the USD around the beginning of February of 2017. The graph below shows the sharing volume of the currencies mentioned above.

This progression is important to understand because the more money dumped into these currencies, whether it be Bitcoin, Ethereum or any cryptocurrency, the value per coin increases and ideally decreases volatility. However each coin has a different set amount of coins that can be mined, but the volatility is highly dependent on the popularity of each cryptocurrency and this will continue to be evident day by day.

The Chinese trading volume tapered from 95% to 20% involvement in January of 2017 because of interventions made by the Chinese central bank and restrictions put into place by Chinese exchange operators. This drastic decline in Bitcoin trading is alarming, and poses the question of other possible restrictions by other governments. The first hearing in the US Senate regarding Bitcoin regulations was in 2013. However, no restrictive measures were made. On the other hand the Chinese put an end to free customer traders which plummeted trading after the 22nd of January.

Come May of 2017 Japan’s demand pushed Bitcoin to a high of $1400 and held over 50% of the trading volume. Following the JPY, the USD was less than 30% of the volume which is significant.

BUT why the recent declines?

Bitcoin and Ethereum have been steadily declining over the past week (still up from last month, but we want to know!) One allogation was a rumor of the Ethereum founder Vitalike Buterin dying which correlated with Ethereum dropping to $284 on Sunday. These allegations were proven false when Buterin posted this picture Sunday night.

Ethereum continues to decline (not significantly), but the question is WHY.
We do know that Ethereum is the more refined blockchain, but what does its future look like? My belief is that with the ‘flash crash’ occurred, when Ethereum dropped to pennies on June 23rd, has scared traders to a realistic understanding that cryptocurrencies are truly unregulated and HIGHLY volatile. When trading liquid currency into cryptocurrency, remember that you cannot trade more than you are willing to lose.

More will be posted following this decline, stay posted.

Resources:
https://qz.com/907629/bitcoin-yen-volumes-a-chinese-clampdown-reveals-a-fundamental-problem-with-the-bitcoin-markets/
http://www.coindesk.com/3-reasons-the-global-cryptocurrency-exchange-market-is-maturing/