Bitcoin [BTC] dropped $550 on Wednesday testing low around $9550. The fall occurred in a span of fewer than 40 minutes.
The price of BTC at 3: 00 hours UTC on 29th August 2019 is $9650. It is trading 4.13% lower on a daily scale.
Jeff Dorman, the Chief Investment Officer at Arca, noted that the rise was accentuated due to low trading volumes. The CME Bitcoin [BTC] futures are about to expire this Friday for the month of August. Dave Balter, chief executive of Flipside Crypto in Boston told the media,
“From our end, it looks like it was a sell-off to cash settle futures that are coming due on Friday for BTC,”
Dorman also suggested that the date coinciding with the festive season is responsible for the drop. He told the media,
“It’s the week before Labor Day. Half of crypto is at Burning Man and the other half is sitting on their hands doing nothing,” he said. “Volumes are low and it takes very little to move markets right now, and you have big futures/options expirations coming up at the end of the week…”
The CME Bitcoin futures had topped $1 billion in trading volumes during the bull run in May. Now, the trading volume has declined to around $370 million. Along with the low market capitalization of Bitcoin [BTC], this makes it very easy to “move markets.”
Furthermore, the long trades also saw a decline in Bitfinex as the traders were already reeling under bearish pressures since last week. The fear and greed index bounced back from its lows on 21st August. However, it is still inclined to the fearful side.
Peter Schiff, who is an eternal Bitcoin bear, took this opportunity to highlight the inadequacy of Bitcoin as a ‘safe haven.’ He noted that the escalating trade tension has had an all-around positive effect on assets like gold, Japanese yen, and Swiss franc. However, “Bitcoin plunged by more than stocks!” He said,
Bitcoin has again failed the safe haven test.
Tom Lee, the co-founder of Fundstrat, agreed with the argument.
Nevertheless, the magnitude of the rise in Bitcoin was much larger than gold or yen during the bull run. Bitcoin is up more than 150% in this year. It gained considerable correlation with world economic events; however, only in the last few months.
Bitcoin traders will be looking forward to the Bakkt launch due next month for a bull action. However, the markets could remain vulnerable to selling pressures.
Where do you think the market is headed? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com