Why Bitcoin is having an un-merry Christmas

[steven36]

The price of Bitcoin crashed again yesterday. But the worst may be yet to come, according to crypto industry insiders.

 

 

We said last month to expect more pain ahead for Bitcoin and the cryptomarket, and here it is.

 

In a trend that is fast becoming a pattern, Bitcoinprice crashed suddenly yesterday, losing as much as $200 of its value in 30 minutes. The cryptocurrency is currently trading below $7,000, a price band it recovered from this past May. 

 

This is not the first time that Bitcoin price has shocked analysts this year. A chart for Bitcoin’s price movement in 2019 displays an undulating and craggy pattern, drawing the cryptocurrency’s often perilous attempts to climb out of a protracted bear market.

 

 

 

At the moment, one bitcoin is changing hands at $6648.16, a decline of 21.36% from its price 24 hours ago. The crypto market is tanking along with the original cryptocurrency, and all coins in the top 10 most-traded cryptos are in the red. The overall market capitalization of cryptocurrencies has plummeted by almost $10 billion to $178 billion in less than 12 hours. 

Did PlusToken scammers cause the crash?

Various theories are doing the rounds as to the causes for the current crash in Bitcoin prices. One of the most plausible ones focuses on PlusToken—an alleged scam perpetrated earlier this year. A report released by crypto forensics firm Chainalysis yesterday implicated PlusToken promoters, who held considerable amounts of Bitcoin, for the selloff that led to a crash in Bitcoin prices.

 

But that explanation is insufficient to explain Bitcoin’s price action when you consider Bitcoin’s low liquidity and diverse trading venues, stated Brian Kerr, CEO of Kava Labs—a decentralized finance (DeFi) platform for crypto leverage and hedging, in an email interview with Decrypt. According to Kerr, the Chainalysis explanation is suspect because crypto exchanges and OTC desks, which account for a majority of crypto volumes, do not disclose trading figures.

 

 

“In both cases, onchain movements only correlate with movements rather than indicate them,” he explained. This means that wallet transfers displayed on a cryptocurrency’s blockchain, which were cited in the Chainalysis report, may not be the exact trading numbers for cryptocurrencies.

 

A year-end liquidation by traders and fatigue from the prolonged bear market are also being cited as possible reasons for the price drop. “Many companies and individuals that hold Bitcoin or other crypto still need to liquidate to fund their day to day expenses, and the fear of Bitcoin crashing even further is likely causing people to sell off further,” Simon Yu, CEO of StormX, an e-commerce platform for micro-tasking, told Decrypt.

 

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