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In the last 48 hours, the price of Bitcoin has fallen by more than eight percent from $ 7,500 to $ 6,890, despite having seen some of the most positive developments in the history of the crypto market.
1-day bitcoin price chart provided by Cryptowat.ch
OTC Sell-Off
The vast majority of short-term traders and occasional investors use cryptocurrency exchanges such as Coinbase, Bitfinex, Binance, OKEx , Huobi and UPbit to buy and sell the main digital resources. Developments in the cryptocurrency sector related to the adoption by traders, the institutionalization of cryptocurrencies and technical innovations can have a significant impact on the cryptocurrency trade market.
However, according to the Tabb Group report, Bitcoin's over-the-counter (OTC) market is incomparably larger than its trading market, at least two or three times. Thus, if the cryptocurrency currency market represents only 25% of the liquidity or global market volume, it is more likely that large retail operators on the OTC market are manipulating the price of Bitcoin rather than individual investors in the public exchanges.
If the dominance of the OTC market is measured accurately, then it also opens an argument on the causality of price movements in the Bitcoin market. In particular, it is difficult to justify the short-term movements of Bitcoin and other digital assets based on developments in the cryptocurrency sector because news can only have an impact on a rapidly moving market and may reflect the outcome of timely events such as the approval of an ETF or the integration of cryptocurrencies by a large retailer.
The OTC market, due to the size of orders, moves slowly, often with the involvement of agents and brokers. Millionaire investors and institutions wishing to purchase at least several thousand BTCs rely on the OTC market to process large orders, because doing so in the cryptocurrency currency market could bring the price of Bitcoin to experience both upward and downward movements. [19659005] If a large order in the OTC market is liquidated, it takes the public cryptocurrency trading market in a few days to reflect. As such, it is possible that most of the sell-offs seen in the cryptocurrency exchange market, as seen in the case of 27 July and 7 August, are likely to be caused by the liquidation of large orders in the OTC market, rather than by a brusque change of trend in the market for the exchange of public cryptocurrencies that can not be tied to a specific event.
Market manipulation
In the last 48 hours, the cryptocurrency sector has seen the New York Stock Exchange (NYSE), Starbucks and Microsoft, the world's largest stock market, coffee retailer and technology conglomerate, lead one collaborative effort to increase the usability of digital resources for casual and mainstream users.
The NYSE stressed that Bitcoin has the potential to become the world's first world currency, in competition with reserve currencies and fiat money backed by the government.
"Bitcoin would greatly simplify the global money movement, it has the potential to become the world's first currency," said Jeffrey Sprecher, ICE's founder, president and CEO.
It is plausible that the OTC market has substantially increased market volatility by liquidating large buy and sell orders and in a period such as this, it can be said with certainty that developments and news do not affect the cryptocurrency market and his evaluation.
Featured Image From Shutterstock, Bitcoin Price Chart From Cryptowat.ch
