Bitcoin experienced one of the highest peaks in December last year where it hit the $20,000 mark. It has since dipped, hitting $6,000. As to why this fall happened, Chainalysis has dipped its hands into data to determine what really transpired.

Chainalysis is a respected team of analysts who have previously worked on why Mt Gox wound up. There report called “The Great Bitcoin Price Dip: Its Causes and a Way Forward”, Chainalysis discusses the price of Bitcoin over the past three months. While the discussion lacks graphical presentations, its observations are interesting and they are backed by evidence.

According to Chainalysis, the regulatory news that drove trading volumes and a peak of positive sentiment pushing price was a big letdown for bitcoin. The bitcoin price dip was also as a result of fundamentals that gave rise to the herding behavior across the correlated exchanges and cryptocurrencies.

The Chainalysts have indicated that it is fairly difficult to evaluate the worthiness of 1 BTC. This is because cryptocurrencies still lack standard fundamentals that could be used in situations of massive price volatility. This simply indicates that the trading volumes were very susceptible to regulatory news but prices were very sentimental.

Throughout 2017, Bitcoin prices indicated that they were susceptible to the regulatory news. The worst came when China was to ban bitcoin but recovered within weeks. Chainalysis, in its report, also refers to other markers that denote the mania phase where Bitcoin settled in the last half of 2017. Google searches climbed faster than prices and so Bitcoin could not sustain such upward trends. This can be described as price correction.

From Chainalysis report, it can be concluded that Bitcoin dropped as a result of regulatory news and emotions that were basically driving the markets. There are also interesting findings such as the correlation of trading volume across major exchanges.