A sharp fall in the value of cryptocurrencies has happened on last 14 and 15 of november. The market still searching for the causes of this fall that took the value of bitcoin under the floor of the year, hitting under U$ 6 thousand. Therefore, this sudden volatility may be a natural movement caused by the popularity of the cryptocurrencies amongst institutional investors.
The hedge funds has been a very popular investment, mainly in the United States. Big institutions has invested on those funds, including some of that have cryptocurrencies in his investment portfolio. Among those institutions is the University of Yale that recently announced gains with cryptocurrencies hedge funds. However, the year of 2018 has presented a poor performance for this type of investment, as reported by Bloomberg. As many funds has invested in cryptocurrencies, the relation between funds and the crypto market has become very close.
This relation seems to be strong, but don’t explain the sharp fall that started on 14 of november. The american’s regulation determines the 15 of november as the limit date to call for redeems the investment in the funds. It means that the fall of value can be just a movement of withdraw in hedge funds. Furthermore, the hedge funds has the worst month of performance in the last seven years. It also could was contributed to the run for the withdraw investments.
Others factors also can have influence in the fall
Despites a possible movement of withdraw in the hedge funds, another event also calls the attention in the world of cryptocurrencies in the last days. A big clash emerged in the community of bitcoin cash after a fork has been announced. The conflict that involved controversial figures in the world of cryptocurrencies maybe has scared fearful investors. This is the second episode of big volatility in cryptocurrency this year after a long period of stability. If the year of 2018 was characterized by the stability of the cryptocurrencies, maybe 2019 be marked as the year of return to rally times.
Note that, as any ative for investment, a fall in the prices means an opportunity of investment. Obviously, it need to be evaluated for each investor, from his risk profile and the projections done to the value of cryptocurrencies. For example, is a consensus that when a institutional investor enters in the crypto market, shall happen a strong appreciation. Nothing more than the law of supply and demand in action. If it will happen we can’t know, but still important to follow closely all the moviments.