2019 New Year Starts out with FIreworks, Showcases the “January Effect” Throughout the Crypto Market
The cryptocurrency industry did not reach the end of 2018 on a good note, which was drastically different from the year before. Some people were expecting some unsubstantiated bull run, considering the increase of $1,000 to the Bitcoin price since its lowest low of $3,200 on December 15th for the year.
However, Bitcoin tragically hopped back down to $3,600 by the 28th of December.
Now, as 2019 digs its heels in for a good year, Bitcoin is presently trading at $3,917.14, coming up by almost 4% in the last 24 hours. As the Constantinople hard fork gets closer, Ethereum has regained their spot right below Bitcoin, overcoming XRP. These upgrades will be happening in about two weeks, which means that ETH has time to pick up the momentum.
The timing could not be more ideal, considering a factor that is known in the stock market as the “January effect.”
The January effect, as defined by Investopedia, is a “seasonal increase in stock prices during the month of January. Analysts generally attribute this rally to an increase in buying, which follows the drop in price that typically happens in December when investors, engaging in tax-loss harvesting to offset realized capital gains, prompt a sell-off.”
The definition continues, suggesting, “Another possible explanation is that investors use year-end cash bonuses to purchase investments the following month.” Considering how the crypto industry is adamant about bringing in institutional investors, the January effect could easily have been brought into this market as well.
Another reason that may indicate why the crypto industry is seeing green could have to do with their current price point and new capital being introduced. The end of the year saw decreased of anywhere from 80% to 93% from the highest high of Bitcoin and most altcoins.
However, the low prices are seen by brand new investors as a significant discount, affording the opportunity to get in on these coins before they truly rise us.
Overall, today, January 2nd, is a good day for the crypto market, especially considering the many digital assets that have found themselves gaining in the last 24 hours. Though some experts are hesitant to call it a “rally,” it is very possible that the January effect is a push upwards for the crypto markets. With all of the new capital, cryptocurrency as a whole is off to a great start in 2019.