In the last two days, cryptocurrency market valuation has dropped to $ 201 billion with Bitcoin losing 13%, approaching its annual low of $ 192 billion.
Since September 6, when the price of Bitcoin has fallen by more than 10 percent over a period of one hour, the cryptocurrency market has continued to decline. Tokens have vanished more intensely than they did in April and June, losing 10-30% against Bitcoin.
Cointelegraph interviewed the chief analyst of ThinkMarkets and the former Bank of America dealer Naeem Aslam, eToro senior market analyst Mati Greenspan, and well-known technical analyst of cryptocurrency Uzi, deepening the recent fall of Bitcoin and the rest of the cryptocurrency market.
$ 40 billion decline: one of the biggest daily declines in recent years
6, the cryptocurrency market lost nearly $ 40 billion from its valuation in less than 24 hours, proving one of the strongest drops in the last few years three years.
In mid-August, the cryptocurrency market fell to its annual low of $ 192 billion, but it took seven days from August 7th to August 14th to record such a great evaluation decline.
Before Wednesday, throughout the month of August, Bitcoin has shown its highest level of stability since June 2017, as Diar's researchers observed. From August 8 to August 26, the price of bitcoin remained relatively stable in the $ 6,000 region, before starting a late corrective rally above the $ 7,000 resistance level.
But, a rally accelerated from $ 7000 to $ 7,400 over a four-day period has led to increased sales pressure, allowing bears in the currency market to cryptocurrencies of take the upper hand, bringing the Bitcoin to a wide margin.
At the end of August, ShapeShift CEO Erik Voorhees said the bear market is not over yet, but the low price range of the major cryptocurrencies presents a viable opportunity for new investors to enter the market.
The daily Bitcoin chart demonstrates four similar movements since February. In the last six months, Bitcoin has risen to $ 10,000, dropped to $ 6,000, recovered to $ 10,000 and tested the $ 6,000 resistance level on four occasions.
In February, Bitcoin rose to $ 11,000 but dropped to $ 6,000. In April, Bitcoin rose to $ 10,000 and dropped to $ 6,000. In July, Bitcoin rallied to $ 8,500, just to test the $ 6,000 resistance level a month later. In September, the same pattern occurs, with each upward peak eventually falling $ 6,000.
Caption: One-day Bitcoin price chart from Cryptowat.ch
If Bitcoin recovers from the $ 6,000 support level, the next short-term rally could send Bitcoin to $ 7,000, which could fall into the region $ 6,000. But, if the dominant cryptocurrency succeeds in successfully climbing into the $ 6,000 region, a chance for a proper medium-term rally with new momentum may emerge.
Factors behind the fall
Speaking with Cointelegraph, ThinkMarkets chief market analyst Naeem Aslam said speculators have unnecessarily stepped up the downward trend of Bitcoin by over-exploiting Bitcoin in the global foreign exchange market.
Aslam stressed that the downward trend of Bitcoin has not changed since December 2017, when the cryptocurrency market reached an estimated $ 900 billion and started a rapid decline:
"Speculators have gone mad and are trying to squeeze as much blood as possible from this trade Bitcoin has not changed what it was since last December, so what is the panic? "
Aslam added that it is difficult to identify the specific factors that led the price of Bitcoin to decrease greatly in the last few months.
Analysts and investors in the cryptocurrency market and the broader financial market often attempt to find correlation in cryptocurrency price movements to developments in the cryptocurrency and blockchain sectors.
However, the correlation is not equivalent to causality and because an event occurs at a certain moment in which the prices of cryptocurrencies decrease or increase by a large margin, does not necessarily mean that the event has triggered a great movement in the cryptocurrency market.
The TABB Group, an international research company, reported in the month of July that the market (OTC) Bitcoin is at least two or three times larger than the cryptocurrency trade market.
Assuming that the OTC market is actually 2 to 3 times larger than the cryptic exchange market, developments in the cryptocurrency sector should have a minimal impact on cryptocurrency price movements – at least in the short term – since the foreign exchange market depends on the broader OTC market.
Reports have suggested that the Bitcoin correction initiated Wednesday was mainly caused by the delay in Goldman Sachs' decision to launch a Bitcoin trading bank.
It is unlikely to state that the decision of an important investment bank to make the offer of Bitcoin trading services – which might not be of interest to its consumer base of institutions and large companies – cryptocurrency custody services have brought the price of Bitcoin to collapse within an hour.
Rather, it is more likely that the continued build-up of selling pressure on Bitcoin and other major cryptocurrencies since December 2017 has created instability and volatility in the market, causing a decrease in market valuation.
Because t The volume of Bitcoin remains relatively low compared to traditional activities and value stores such as gold, it is easier to trigger a domino effect through the main exchanges of cryptocurrencies.
Goldman Sachs postponing the not significant Bitcoin trading desk
On 6 September, Cointelegraph reported that Goldman Sachs delayed the official launch of its structured Bitcoin trading desk to facilitate the growth of demand from retailers and retailers. of individual investors.
Goldman Sachs spokesman Michael DuVally told Reuters that the bank was unable to reach a consensus on the roadmap of its digital assets, citing various regulatory issues that currently exist in US markets.
Hours after DuVally's statement, Martin Chavez, Goldman Sachs chief financial officer, personally refuted the reports that the institution is rotating since the formation of a Bitcoin trading operation, which characterizes the relationships around it as "false news". [1 9659002] Aslam has stated that it is premature to attribute the market struggle throughout this week to the delay in the launch of the Bitcoin trading operation by Goldman Sachs, as the bank did not close its operations, but is limited to focus on a more urgent initiative initiative that is the custody of cryptocurrency:
"Goldman has only delayed the process, they have nevertheless invested a lot of money and talent in this area." Investors should know that it is very normal for banks delaying the IPO process if the market conditions are not favorable and here we are talking about starting something completely new Goldman has fingers in many areas when it comes to Bitcoin, so stop thinking about it and concentrate on the price. "
, the cryptocurrency market has a wide range of regulated exchanges such as Coinbase, Gemini, and UPbit that can be used by retailers to invest in n and the cryptocurrency market. However, it lacks trust and reliable solutions that overcome the barrier between cryptocurrencies and institutions.
It can be argued that Goldman Sachs is working on a more urgent issue that needs to be addressed in order to convince the broader financial market and governments recognize cryptocurrencies as emerging asset classes.
As such, while the announcement of Goldman Sachs contributed to the downturn in the market, as the technical cryptocurrency analyst Uzi told Cointelegraph, it is difficult to recognize Goldman Sachs as the sole cause of the correction. Bitcoin was already facing a resistance around $ 7.400, the peak reached last week before sliding down:
"I feel that the news of Goldman Sachs on their return plans on their desk encryption have certainly helped to make taking the Bitcoin, we found ourselves facing resistance around $ 7.400, but it is not the biggest secret in the world that a huge amount of BTC shorts have been added in the days of Bitfinex before this fall in. 10K BTC in short films, I think – follow the money, as they say. "
Mati Greenspan, senior analyst at eToro, one of the largest multi-asset trading platforms in global finance
the industry, with eight million active users, reiterated sentiment of Aslam stating that the cryptocurrency market has had a similar trend in recent months, failing to exceed the resistance level of $ 8,000 with a solid volume and a moment vo:
"Volatility in cryptographic markets has increased in recent days, but it is still quite normal for this market. As for the price of Bitcoin, the price has been in a fairly stable range between $ 5,000 and $ 8,000 in recent months and this has not changed. "
Greenspan added that market volatility can be attributed to the lack of demand from traders in the cryptocurrency sector, rather than specific events that analysts have identified as the main cause of the recent correction.
" Some Possible reasons for the decline could be some bad rumors circulating in the press, along with a stronger dollar and weakness in technology stocks. Ultimately, it is simply a matter of increased supply and lower demand in short-term trade. "
The technical analyst states that the bitcoin market is illiquid, false volumes
Bitcoin is not considered a sufficiently liquid market, especially considering the fact that its trading market is open to any individual investor and retail merchant in the global market While cryptocurrency market data providers estimate the daily Bitcoin volume of about $ 5 billion, studies have shown that most major cryptocurrency exchanges increase their volumes through the trading of
Alex Kruger, economist and cryptocurrency trader, stated at the beginning of this week that Bithumb, the second largest South Korean cryptocurrency exchange behind Kabao, announced that more than $ 250 million worth of fake volume has been created since August 25
He explained that a group of traders took advantage of the re bump of the 120% trading fee of Bithumb, which can generate about $ 90,000 of net income, with a daily trading volume of $ 250 million.
"Currently there are $ 250 million [in] fake volume traded at [the] Korean cryptographic exchange Bithumb, daily at 11 am Korean time, from August 25. Bithumb offers 120% repayment of trading commissions as a air launch: The cost of trading is 0.15% To collect the entire KRW 1 billion rebate, a lava dealer must then exchange KRW 278 billion, which is $ 250 million in the daily false volume Note how the 31K Bitcoins are traded exactly at 11am. "
Directly or indirectly, the method used by Bithumb has incentivized the washing trading that increases the volume of daily exchanges of the exchange of cryptocurrencies. The final result is a daily net income of $ 90,000 for a group of operators and a significant increase in Bithumb's daily trading volume.
However, while the method leads to a win-win situation, it affects the global cryptocurrant trade market in a negative way – as it reduces the authenticity of the volume of international cryptocurrency trading.
Uzi said that liquidity and false volumes are two problems that cryptocurrency trade will have to face urgently, to ensure that investors in the market are protected and governments can recognize the sector as a legitimate sector:
"Solving the problem of liquidity is one that must be tackled, and the problem of false volume is something that must be tackled on a larger scale, because there are decidedly controversial volumes on the major exchanges. "
Uzi also noted that the Bitcoin market it is still generally illiquid, given the lack of activity on the part of institutions and hedge funds of scale in the sector. He said the market is not yet ready to support the large demand from institutional investors, and most of the short or long-term contracts around Bitcoin archived through the US futures market or the cryptocurrency trade are carried out by individual investors.
"I've always felt the market for Bitcoin is still illiquid, especially if you look at the altcoins market, I do not think any professional institution took a short position at that moment on Bitcoin just because of its volatility and when he tested a decent resistance, as well as the enormous opening that was evident for the most part, would be a terrible risk management. "
Where the market goes on with the ETF variable Coinbase
Come Cointelegraph reported on September 7, the world's largest asset manager, BlackRock, which controls $ 6,317 trillion assets, and Coinbase, the largest cryptocurrency trade and brokerage sector, are in talks to develop a covenant-based exchange-based fund ( ETF) to support market activity and facilitate the growing demand from institutions for cryptocurrencies.
The entry of VanEck and the Chicago Board Options Exchange (CBOE) has already increased the likelihood of approval of the first Bitcoin ETF by the US Securities and Exchange Commission (SEC). BlackRock's involvement will create more competition in the Bitcoin ETF space between regulated financial institutions based in the United States, which could lead to more contenders depositing with the SEC to improve the liquidity of the dominant cryptocurrency.
Variables such as Bakkt, Coinbase- The ETF BlackRock and positive regulatory developments in Japan and South Korea could contribute to the recovery of short-term cryptocurrency, which the previous corrections in 2012, 2014 and 2016 had not .
Experts generally agree that the correction in the cryptocurrency market on 6 September was caused by the increase in selling pressure and the culmination of various developments, rather than by a single event such as the announcement Bitcoin trading of Goldman Sachs which has a huge impact on a global market.