Here is another update from our good friends over at Bitcoin Bravado.
The price of Bitcoin (BTC) is currently $6750, with 24 hour trading volumes around 5.77 Billion in USD with a market dominance of 39.3%. Over the weekend $BTC’s price dropped by nearly 12% and the market cap went from nearly $339 billion to $293. The BTC Volume has steadily paced upwards, but has most likely originated from many crypto traders and investors attempting to liquidate their positions as the market has nosedived down (FOMO and FUD).
In the past few weeks, we have been as deliberate as possible while sharing our strategy with you all. We liked the consolidation that was occurring in the mid-$7000’s and decided to take some entries and reallocate our exposure. That being said, we continually highlighted the disapringly low levels of volume and discussed what our exit points would be in case the market continued to turn south.
Many of our analysts signaled $7200 as their point of reducing exposure or turning net short, while others highlighted $6800 which has also been broken.
An aggregated estimate of our analysts exposure has us, on average, represented with 70% fiat and 30% crypto. While common technical analysis tools are indicating that Bitcoin is due for a bounce, it is hard to rely on those currently as sentiment across the cryptocurrency ecosystem is overwhelmingly bearish due to recent developments.
The explanation of the mass capitulation witnessed in the market this weekend cannot be, as we always suggest, linked to one specific event, although some occurrences hold more weight than others – such as when China cracked down on cryptocurrency trading last year. Active members in the space during that time understand the gravitas, or seriousness, of China’s involvement in the cryptosphere prior to its exit, which is why its departure was felt far and wide. 🌏
Nonetheless, the prodigious fall in the market this weekend was not a fault of a nation abandoning the market; instead, it fell due to media coverage of Coinrail being hacked and fears of potential market manipulation by four exchanges.
With respect to the media coverage, let us paint a picture for you: Coinrail, a small exchange literally ranked 100th in trading volume was hacked. The hack itself is unsettling, but the heist itself resulted in a total loss of $40 to $46 million. Yes, the fact of losing around $40 million dollars is hard to swallow, but much larger hacks have occurred and, therefore, the theft of $40 million dollars from an exchange used by less than a percent of the community would not send the market into a frenzy of mass panic. It certainly does not provide peace-of-mind, though.
A more pressing issue within the space is that U.S. regulators launched a probe into four United States-based exchanges this weekend: Coinbase, BitStamp, itBIT, and Kraken. The investigation is to unearth as to whether any market manipulation has occurred within the preceding exchanges, which are used by the Chicago Mercantile Exchange to derive its value for Bitcoin futures. An investigation of this extent is, hands down, the leading case behind the capitulation of this past weekend.
With the probe ongoing, we will continue to gather intel to successfully maintain a grasp on what unfolds. Rest assured, any updates in this investigation will likely send the market rapidly up, or down. Stay tuned.