The Chinese New Year will soon officially start, and will naturally be most marked in China. However, the increasing globalization means that the effects of the Chinese New Year are felt all over the globe. Is the Chinese New Year likely to affect the cryptocurrency market, and if so, in what way?
Chinese New Year celebrations have already begun, national slowdown expected
Celebrations for the Chinese New Year began on January 28th, but the New Year will officially commence on February 5th. Moreover, festivities will continue until the 19th of February. This period is marked by celebrations, and many Chinese individuals choose to take vacations or visit relatives during it.
As such, millions of Chinese are expected to travel abroad over the next weeks. Moreover, many Chinese will also travel within the populous country in order to reunite with family.
Subsequently, all of China is expected to slow down somewhat in the coming weeks – just like most western countries do during Christmas and western New Year celebrations.
Nevertheless, it remains to be seen exactly what effects this slowdown will have on the cryptocurrency market. Although cryptocurrency trading has officially been banned by the Chinese government, a large swath of Chinese cryptocurrency traders has been able to circumvent these restrictions, for example through the use of VPNs.
Moreover, many Chinese cryptocurrency-related businesses are still active – but have left mainland China. Both Binance and Tron are examples of this. Whilst Tron has two headquarters, one in Beijing and one in San Francisco, Binance has operations all over the world – including Japan, Singapore, Uganda, Malta, and Jersey.
Chinese traders can influence over the cryptocurrency market
All of this makes it evident that Chinese traders still have significant influence over the performance of the cryptocurrency markets. In fact, there has even been some speculation that Chinese capital outflows could supercharge the cryptocurrency market in 2019.
Be that as it may, it becomes clear that the general economic slowdown expected by the Chinese New Year could impact the cryptocurrency market. Ethereum World News recently reported that Bitcoin’s trade volume was directly impacted by the start of festivities on January 28th.
Due to this, it is entirely possible that the trade volume might drop further during the upcoming Chinese festivities. Moreover, some Chinese investors may be prompted to liquidate some of their holdings to fund vacation and travel plans.
However, it remains to be seen whether this indeed happens or not. The performance of cryptocurrency markets is known to diverge from that of traditional capital markets. It will, therefore, be interesting to watch how market sentiment continues to develop in the coming weeks.
Image Source: “Pexels”
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.