In the last few days, the crypto world has seen a lot of drama. Cryptocurrencies have been dancing up and down; some have been performing exemplarily whereas negative investor sentiment has taken a toll on others.
For instance, in terms of market capitalization, Ripple(XRP) has already eclipsed Ethereum although one ripple is still going for a fraction of a dollar.
On the other hand, Bitcoin seems to be having a rough time. For just a few days, Bitcoin’s price has plummeted by more than 20%. However, comparing with its all-time high $20k price, Bitcoin has dropped more than 80%.
So, if you were convinced to buy bitcoin 11 months ago, you must be bleeding money. Everyone who bought bitcoin during the last Thanksgiving has incurred a 45% depreciation of his/her investment.
Bitcoin crash – What caused it?
Price action is influenced by a plethora of factors and there’s no way you can be sure what caused a hike or a drop in an asset’s market price.
Usually, there is always a technical and a fundamental aspect to consider. Technically, it can be a temporary price pullback. But can a routine pullback shed off more than 20%?
However, it is worth noting that the U.S. justice system has already launched an investigation on possible bitcoin price manipulation. It is alleged that unscrupulous individuals systematically propped up bitcoin’s price. The actions led to a rally where bitcoin reached an all-time high of $20k.
Bitcoin Price manipulation concerns
According to CNBC, Justice Department is investigating whether Tether was used by traders to sustain Bitcoin’s momentum during its record-breaking rally.
Tether is a controversial crypto that is said to be backed one-to-one by the U.S. dollar.
The allegations were also retaliated by John Griffin (a University of Texas Professor) in a research paper. According to the paper, more than 50% of bitcoin’s price movements were choreographed and coordinated.
Whenever bitcoin price started declining, traders allegedly bought bitcoin using Tether to stabilize the crypto’s price.
• Bitcoin crash causes the crypto to shed more than 20%.
• Bitcoin’s price pushes below $4500 for the first time in 13 months
• U.S. Justice Department launches investigations into alleged price manipulations
What next for bitcoin
Well, I think it depends on where you stand. Pessimists may predict a further slump while optimists my project a better performance in the future.
From where I stand, this may be just but a temporary situation. The story-line may be very different next Thanksgiving. Whether the price will push below the $4000 support price level or hit new highs is dependent on the prevailing investors’ sentiment. Let’s wait and see.
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