I didn’t want to write about this, because I am not an economist or mathemetologist, but the price of XCH has really taken a hard hit over the last couple of days. Its right now down almost half its value from a few days ago and there is no indication the downward swing is over. The last crash we wrote about was actually just as bad, but not on a percentage basis. This one feels pretty devastating to everyone with an XCH position.
So what is going on? I don’t know. Not really. And neither does anyone else.
But to speculate for a second, I think there a few things going on. One, the crackdown in China is leading to everyone dumping all the coin they are holding right now in order to stay compliant with Chinese law. This will have an immediate effect on the prices of everything they are selling, and also brings me to the second point. The downward price pressure is causing other XCH holders to sell off big chunks or liquidate entirely – some with the idea of buying back in later, but most simply to recoup costs. And that brings me to my 3rd point, which is why the price is dropping so fast compared to other coins. There are no buyers! There is no reason to buy a position in XCH unless you think the price will go up, and with the price crashing I can’t imagine that’s a large demographic.
So what is going to happen? Again, nobody knows. There are a lot of factors at play here that no one understands, or even has all the information on. The only thing we can be certain of is that days are still early for Chia and XCH, and right now there is a lot more supply than demand. Maybe that reverses and the price starts to climb or maybe the downward acceleration continues until the coin is planted firmly in the dirt. I can tell you I still haven’t sold my XCH, but I am pretty sure I should have.