We’ve seen many questions about how the Chinese New year affects Bitcoin price and if there could be a drop. The short answer is yes. The Chinese New Year or Lunar New Year is one of the most important holidays in China. It falls on different days every year since it follows the lunar calendar. This year, the festival will be held between February 12 and February 15. Since China represents 60% of Bitcoin mining operations this could have negative effects.
Some activities that mark the new year festival are:
- All Chinese factories and major companies remain closed even up to two weeks after the Chinese New year. This includes Over-the-Counter crypto trading desks
- Many Chinese people travel to spend the holidays with their families including Bitcoin miners.
- There is a lot of spending and Chinese traders tend to sell off large portions of their cryptocurrency days before the holiday.
How the Holiday has Affected Bitcoin Prices in the past
In the past 4 years, cryptocurrency prices, especially that of Bitcoin have dropped in the days before the Chinese New Year. Crypto traders call this the “Chinese New Year Dump”.
Most market makers are located in China. Their activities reduce how wildly crypto prices swing. But during the holidays, they tend to shut down operations for 3-5 days. The result is that the price of Bitcoin and other currencies become more volatile.
The price of Bitcoin dropped by 8% in 2017, 20% in 2018, 50% in 2019, and 17% in 2020 during the Chinese New Year.
How to Prepare for the Chinese New Year Dump
We can’t say for sure that the price of Bitcoin will drop during this year’s festival. But from past examples, we’ve seen how the Chinese New Year affects Bitcoin’s price so it’s good to be prepared for anything. The following steps could help you get through the holiday:
P.S this isn’t financial advice. We encourage you to study the market and do what works for you.
- Look out on social media and telegram communities for updates and hints concerning the price.
- In the past 5 years, prices have always stabilised after the New Year dump so don’t sell blindly. Instead, choose a sell limit where if the price goes below that point, it could really affect your investment.
- Take advantage of the dump. If you’ve been looking to buy more Bitcoin, you could look into loading more coins for a quick cashout when the price goes back to normal. This might not be everyone’s cup of tea.