Very few industries are subject to as much criticism and personal opinions as cryptocurrency. It seems the opinions on Bitcoin and other currencies or projects are all over the place. While that creates some exciting conversations, it also appears they lead to a lot of misinformation. When it comes to the recent market sell-off, for example, it was seemingly a matter of time until the positive momentum was turned into a negative spree.
Explaining the Recent Crypto Market Drop
A lot of people were surprised to learn all major cryptocurrency markets lost a ton of value earlier this week. Even though the initial momentum throughout 2019 seemed somewhat promising, most of the gains have been eroded ever since. There are still a fair few questions as to what triggered this dump and whether or not it was an orchestrated event. According to David Thomas, the current situation may be an accumulation of recent events.
It is not the first time some information emerges regarding the recent market drop. Earlier this week, another industry expert noted a very large and strange Ethereum transaction being sent to an undisclosed exchange right before the massive sell-off began. That fact seemed to hint at some orchestrated event, although these claims have yet to be proven at this point. GlobalBlock co-founder David Thomas is seemingly thinking along the same lines, up to a certain extent.
More specifically, he looks at the recent cryptocurrency industry developments from multiple angles. Ranging from the Ethereum Classic 51% attack to the suspicious Ethereum transaction and a recent price surge, they all contribute to this recent sell-off in their own way. When combining all of these facts, it almost seems as if this bearish pressure would materialize regardless of what happened to the industry as a whole. David Thomas explains as follows:
“A few drivers are rumoured to be behind the crypto sell off in the last 24 hours. Firstly, there was a 51% attack on Ethereum Classic which resulted in the apparent double-spend of $1.1m of ETC. Naturally occurrences such as these can tend to cause some fear in the market surrounding overall security and confidence surrounding both cryptocurrencies and blockchain technology itself. Secondly, there was also talk today of a ‘whale’ moving 319,000 ETH ($68m) onto an exchange today which may well have spooked the market to further sell-offs. Thirdly, ETH has risen off its lows before Christmas by some 80% and any weakness can often lead to a trigger of profit taking from those that managed to catch the lows around $82 in December. Lastly, it is worth noting that today’s move yet again highlights how volatile digital assets can be and we can expect them to remain volatile, at least until there’s further institutional involvement in the space.”
Especially the latter aspect of his sentiment is rather interesting to keep an eye on. Cryptocurrencies are notorious for their volatility first and foremost. Following the massive price decrease throughout early 2018, it appeared as of this volatility had slowly begun coming to an end. Unfortunately, that doesn’t appear to be the case now that 2019 has come. The early momentum seems to confirm more fluctuations lie on the horizon, which doesn’t necessarily bode well for any market.
Keeping that information in mind, one has to wonder how things will evolve throughout Q1 2019. So far, the momentum seems overwhelmingly bearish and continues to erode any gains achieved throughout the first week of this year. Until Bitcoin goes through a notable and sustainable price increase, there might not be any real momentum across the other markets either. Slowly but surely, the Bitcoin Dominance Index approaches the 53% point again, which is not necessarily what the industry needs right now.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency.
Image(s): Shutterstock.com