Bitcoin price CRASH: This is the reason cryptocurrency prices are PLUMMETING
He said: “What happened with Bitcoin over the last three to four months is simple physics where there was just so much buying and the price went up so fast, so high, so quickly that it was unsustainable, it had to come down.
“Very much like when you pull a guitar string too high, it doesn’t just go to back to neutral, it has to release all of that excess energy. So what we’re seeing right now, in my opinion, is a lot of that excess energy falling out.”
Bitcoin saw a rapid decline of 30.9 per cent in January 2015 - the month has a history of being bad for virtual investments.
However, the cryptocurrency owner claimed that the trend of the Bitcoin dropping in at the start of the year is “just coincidence”.
He continued: “You mentioned a history of Bitcoin struggling in January, in the world of trading we really like to look for patterns, maybe it’s just a human thing. I don’t really put much confidence in the January thing.
“I think it’s just coincidence that this is all just kind of crashing at the moment.”
Mr Derks disclosed that he had warned his clients to “fully expect at least a 40 to 50 per cent drop every year or so” to avoid investor panic during times Bitcoin values plummet.
He went on: “The last four months the amount of energy that was put into Bitcoin was incredible and I read a headline it seems like every couple of weeks about the number of credit cards and short-term loans that are being associated to buying cryptocurrencies.
“So what’s going on right now doesn’t surprise me at all, one of the things I tell all of the clients that work with me is that they should fully expect at least a 40 to 50 per cent drop every year or so
Mr Derks markets himself as the perfect first-step for investors looking to take the step into the virtual realm - he offers advice and puts funds into the most lucrative coins.
The virtual currency investor declared he had warned his clients that a drop in Bitcoin was about to take place before values went into free fall.
He continued: “So everybody was very much expecting this, I called everyone and let them know ‘hey this is going to happen’ We sold a little bit out to protect ourselves on the downside and it’s working out well so I’m not too concerned. It’s just a lot of excess energy that’s been put into buying Bitcoin and again natural markets do this.“When any traditional asset goes up too fast it has to come back down. So right now we are testing to figure out where that number should have been and it looks like quite a lot of people are a bit nervous about this situation.”
Mr Derks is fully invested in cryptocurrencies like Bitcoin and believe they are “potentially the most disruptive piece of technology or software that has ever been written” thanks to the elusive nature that allows it to escape the clutches of governments.
“Countries like Venezuela are absolutely seeing the benefits of a currency or piece of technology that can act as a currency that is not influenced by any central government or central bank.”
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