Before starting the article I'd like to signal I attached a PDF with its Spanish version which you can find here. Also, due to the lengthy of the article I divided it in two parts, the second part I'll publish tomorrow (Spanish version has full article so, if you understand it you can download pdf as well)

Last week, while I watched how Bitcoin risen beyond $10000, I couldn’t avoid to remember when debuting 2018 BTC prices fell from its historical maximus of more than $18000 to $8000 only in January and then continuing it fall to $3000 the rest of the year, as many even expected it would rise up to $20000. Likewise, there were many factors joined themselves to create the perfect storm that plunged the price of the iconic cryptocurrency.

It’s worth to mention, besides Bitcoin, all others cryptocurrencies were affected, highlighting general crypto market (without including Bitcoin) had a retreat of 44% its value moving from $540 billion to $305 billion only in first January weeks.

Source: www.coinmarketcap.com

But which are the real causes of fatal Bitcoin’s fall?
Principal keys are:
•South Korean sanctions
•Bubble market
•BTC Cash war

The South Korean Issue

Undoubtedly, South Korea plays an important roll in what was the abrupt BTC’s prices fall early 2018, such country represents the third largest market of Bitcoin following America and Japan. Since the government legalized transactions with cryptocurrencies on financial markets in 2017, its demand growth disproportionately to the point only South Korea conformed the 20% of transactions around the world, having even scholars involved in trading; a trend government labeled as ‘’ridiculous’’.

Motivated, further, by a cyberattack the same year, the government decided to apply a series of regulatory measures on cryptocurrencies to guarantee security of operations and prevent the illegal use of BTC as a way to launder money, avoid tax, among others. Measures that began with a ban on ICO fundraising platforms, sanctions to Coinone and Bithumb for alleged tax evasion, even rumors of total ban on operations with cryptocurrencies announced by justice minister in December, which caused the 21% BTC prices fall, despite of clarification such measure just was in consideration.

Already in 2018, despite cryptocurrencies ban was officially discarded, the new sanctions pack would make worst the rough time of BTC that had cryptocurrency since its sudden collapse early the year anyway, this time being about of ban on anonymous traders and a tax of 24% on exchanges with cryptocurrencies and the ban on foreigner traders in South Korean exchanges platforms.

According to Korean government, foreigner traders promoted illegal injection of funds and market manipulation on South Korean market which was the principal concern of the entity, especially Chinese investors flooding the markets with cryptocurrencies they illegally exchanged by foreign currencies since China banned such operations on markets.

“With the current conditions of our market, higher supply would equate to higher speculation.” Kim Jin-hwa, corepresentative of the Korea Blockchain Association.
Source

Keeping in mind the principal attractive of BTC is the opportunity to dispose of complete autonomy on the control of money without have to deal with banks nor governments besides the complexity of the codes that make hard the operations track, giving the users the anonymity, the South Korean government’s sanctions seriously decreased the domestic demand and they were a factor contributed to the fall of 40% of its value.

''The sell-off comes amid concerns of fresh crackdowns on virtual currencies by the South Korean and Chinese government and as governments across the globe are struggling at how best to regulate bitcoin''. Fiona Cincotta City Index analyst.
Source

Market Bubble

Bitcoin’s incorporation in markets was a big BOOM and caused a lot of euphoria on people, most of them seeing it as an easy way to make money to the point we found on YouTube thousands of videos from people not even involved on cryptocurrencies or trading field talking about invest on BTC, even we could see comments like ''Bitcoin will never fall'' or ''market bubble are impossible on BTC'' as it would have told by McAfee’s founder, John McAfee.

However, I’d dare to say not even Bitcoin could save itself from become victim of a market bubble, keeping in mind market bubbles are a phenomenon that appears when a good’s value rises uncontrolled and abruptly due to speculation it exceeds its real value, and that was what we saw in 2017 where cryptocurrency’s demand went beyond its limit of 21 million of bitcoins mined annually, in addition to the complex mining process that makes Bitcoin’s mining so slow in comparison with the frenzy generated on markets by the cryptocurrency.

Although there isn’t consensus about what could cause the emerging of a market bubble because of this don't necessarily is tied to market’s speculation, there exists three phases to identify the process of emerging and eventually crash of a market bubble, as France Coppola show us. In the case of Bitcoin that was:

1 ''The "Free Lunch" period. A long, slow buildup of price distortion, during which investors convince themselves that rising prices are entirely justified by fundamentals, even though it is apparent to (rational) observers that they are buying castles built on sand.’’

Once formalized the trading with cryptocurrencies in U.S, South Korea, among others markets it began a speculative euphoria principally by cryptocurrency’s enthusiasts, confidents the new technology would bring a long period of continued profits, being something almost immune to market fluctuations due its innovative characteristics that made it very attractive to investors, becoming a way to ‘’get big fasts’’ quoting dotcom crisis’s slogan because bitcoin situation was a bit similar.

2 ''The "This is nuts, when's the crash?" period. Everyone knows prices are far out of line with fundamentals, but they carry on buying in the irrational belief they can get out before the crash they all know is coming. Speculators pile in, hoping to make a quick profit. Prices spike.''

At the end of the year the BTC started to reach its historic maximum and it continued rising despite the little turbulences by South Korea’s sanctions, although there already were some fears about crash on some traders, there still was a massive purchase of BTC in markets because of price kept its rising trend, in others words, people purchased Bitcoins because expecting others do it as well, increasing the demand and then, make profit from the purchase from others. Something The Economists defines as ''Greater Fool Theory''.

up to here arrives this first part, the rest I'll publish tomorrow.