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Today, the entire crypto currency market fell an astonishing 25%. The market is now valued at $440b.

 

Today also marked the closing of Bitcoin futures contracts at the prominent trading institution CME group.

 

Coincidence?

 

One reddit user doesn’t think so.

 

In the post, the user outlines how futures contracts work. By hedging (being on both sides of the deal), big players can minimize risky investments and control the game.

 

With the futures contracts expiring, the investors are able to flood the market with sell orders, driving down the price. Then, they are able to buy back their bitcoins for a cheaper price as many new investors panic sell into the drop.

 

This theory gained widespread attention on reddit, however other users were quick to point out that the cryptomarkets traditionally fall at this period in January. They speculated that the Asian markets may be the cause, with investors selling their crypto for festivities such as Chinese new year.

 

Whilst the cause of the crash is as yet undetermined, this event once again highlights the importance of doing your own research in the crypto space, and never investing more than you can afford to lose.

 

 

 

 

 

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