Crucial Bitfinex Vs. NYAG Hearing and BTC Analysis of Plunge to $9150: Expert Opinion

Published July 29, 2019 | Updated July 29, 2019

Mati Greenspan

Crucial Bitfinex Vs. NYAG Hearing and BTC Analysis of Plunge to $9150: Expert Opinion

  • Traders present a paradoxical on Bitcoin price if Bitfinex and NYAG case goes through
  • Bitcoin proponents closely watch central Banks Monetary Policies
  •  Bitcoin Price Analysis of Flash Crash to $9150 this morning, along with analysis of Fear and Greed Index

The Bitfinex vs. NYAG case will unfold in court today. New York’s Attorney General has accused iFinex of embezzling $700 million. While the attacks have been posed against a single exchange, the potential effect on crypto prices may well be significant.

The charges against the Exchange and Tether, if proved, would motivate the people to flock to Bitcoin and other cryptos due to loss of trust. This is a bullish scenario for Bitcoin and other cryptocurrencies. Nevertheless, the total market capitalization should remain constant.

Last week I had a conversation with @Bitfinexed on twitter, who has accumulated more than 45,000 followers by opposing Bitfinex and their involvement with Tether, puts it this way.

usdt danger
A snippet of Conversation about Bearish Case

Now, this is a bit more concerning. If iFinex indeed has been deploying creative monetary policy in the crypto market, it could be an indication that current valuations are overdone.

IF that is indeed the case, we’ll then need to understand more specifically how much unbacked USDT has been deployed in the market. If the extent of it is just $700 million, then the impact on price would likely be insignificant as this is approximately as much money as is traded on a slow day in the crypto market.

Hence, it presents the possibility of a bullish scenario along with chances of mayhem.

Crypto Reactions to Central Bank Policies

Usually, central bank action has a lagging effect on crypto prices. However, a recent newsletter from famous crypto influencer Anthony Pompliano explaining how central bank easing is good for crypto may have more crypto traders watching these updates and reacting to them in real-time.

The correlation with the fall of the FIAT currency, which was also explained in Ray Dalio’s piece of the paradigm shift in the global economy, with Bitcoin has been strong this year. Moreover, the central banks have been accused of overusing monetary stimulus beyond sustainability.

Nevertheless, crypto is a bit different than the rest of the assets in that ingrained in its very nature is the ability to act as a hedge against central banks and fiat money. Hence, even if everything else fails, there is a high probability that crypto will prevail.

Price Analysis

Currently, the volume of trading in Bitcoin is low, and Bitcoin is stuck around $10k. This presents an opportune moment to create volatility in the market.

Well, that’s exactly what happened last night as bitcoin fell nearly 4% and made a full recovery, all in under an hour. Here we can see the crypto flash crash of July 29th (US Time) that took place during the early Asian session.

Bitcoin [BTC] tested a low near $9150 at around 5: 30 hours US time on 29th July. The price action was remarkably swift. It all transpired within 30 minutes. Bitcoin fell from $9500 to $9150 and climbed almost as quickly.

mati chart analysis
BTC/USD 5-min chart

According to some analysts though, the fact that a full recovery was seen this quickly could mean that the last of the weak hands have now been removed and that the downward pressure may soon let up.

That being said, we can also see that the crypto Fear & Greed index has itself been somewhat volatile lately. Today it’s reading as low as 19 whereas it was as high as 47 just two days ago.

The index is prone to high fluctuations as witnessed before as well. It is influenced by both price reactions and news around Bitcoin.

greed and fear
Bitcoin Daily Greed and Fear Index

Take a look at the period between November 22nd and December 18th, where the index showed prolonged fear after the mid-November capitulation and proceeding the current bull run.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Mati Greenspan 45 Articles
Mati Greenspan is the Senior Market Analyst at eToro, a global social trading and investment platform. Mati is a licensed portfolio manager in the European Union and his main focus is on macroeconomic analysis, portfolio diversification and cryptocurrencies. Follow him on Twitter at @matigreenspan
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