What could have caused this major retracement? What made more than 30 Billion USD vacate the cryptomarket? Here are some possibilities.
It has been a hectic few days for crypto enthusiasts with the market taking a complete downturn. Across the board, altcoins are down more than 30% and Bitcoin is down 15%. Many people across crypto-twitter did not see this coming. Even the most successful influencers in the space were calling long contracts on Bitmex. So what could have caused this major retracement? What made more than 30 Billion USD vacate the global market cap? Here are some possibilities.
- The Bitcoin Cash Fork.
Many individuals are calling the Bcash fork the main culprit here. Bitcoin Cash, one of the biggest market cap holders in cryptocurrency, is being split into two new coins; Bitcoin ABC and Bitcoin SV ( Satoshi’s Vision). It was just a few days ago that it rose nearly 50% in value to only fall back down as the fork nears. Major exchanges are halting trading for the upcoming fork. If you have an account on Bitmex or Bitfinex you most likely received an email detailing what will happen during the fork. This fork could have lowered crypto sentiment as individuals who don’t understand the process could be weary and fearful of what’s going on.
2. SEC Releases an Annual Report.
The U.S. Securities and Exchange Commission has been very vocal this year about digital assets and the dangers of ICO’s and whether or not they are securities. One of the key takeaways is since 2017 the SEC has 20 cases to court involving ICO’s and digital assets. The U.S. Securities and Exchange Commission wants “to protect investors from the risk posed by fraud and registration violations against the risk of stifling innovation and legitimate capital formation”.
How can such a report cause a downturn? Well, it’s like when you were a child and momma told you not to watch TV but you do it anyway when she’s not home. But then you hear the door open so you turn it off and unplug it quickly. The SEC is the regulation people don’t want in the cryptocurrency community but it’s something we need. Too many people have fallen victim to scammy ICO’s. You can read the report here.
3. The Big Players are taking Profits and Creating better Positions.
The last couple of months, bitcoin and most altcoins were trading sideways. According to some guests on CNBC Fast Money, it could be some funds and institutions deleveraging. They also said that since a big fork is happening, people tend to get weak hands and sell off some assets. What can be an even more outrageous idea is that within a few months BAKKT will be launching and Fidelity Digital assets platform as well. Some bigwigs could be trying to create better positions to get in on for what could be a very nice run up come Q1 2019.
It is safe to say that all 3 of these points could have fueled this drop in asset value. What are your thoughts on the current state of the market and what could be coming soon? Leave a comment below.