This weekend saw cryptocurrency markets across the world drop, with Coinmarketcap reporting a more than $20 billion drop in the market’s value. Bitcoin plunged more than 6% over the weekend as did Ether. The smaller cap altcoins saw drops as steep as 10% or more. The question is why did this drop take place?
Theories on Why Markets Tumbled
Coinrail, a small South Korean cryptocurrency exchange was hacked on June 10, which, according to mainstream media, including news majors such as Wall Street Journal, Bloomberg, Reuters and the Guardian, was the reason why markets crashed over the weekend. According to the news, about $40 million worth of cryptocurrencies were done away with.
According to mainstream media, investors’ enthusiasm for cryptocurrencies has subsided because of the large number of crypto-heists that are taking place. So, while the reports also acknowledged that the size of Coinrail’s operations was insignificant in the global scale of things (trading at barely $2.65 million per day, and being 99th on the global list of crypto-exchanges), the fact that another heist took place is what tumbled the market.
Another theory that was widely publicized by new agencies was the investigation launched by the Commodity Futures Trading Commission (CFTC) on four of the biggest cryptocurrency exchanges. The four exchanges are Bitstamp, Kraken, Coinbase and itBit. These four exchanges provide data to CME Group’s Bitcoin based futures contracts and the allegations are that these firms have been involved in cryptocurrency price manipulation.
Crypto Community Reaction to These Theories
The cryptocurrency community is getting frustrated by the knee-jerk reaction that the media has about why the cryptocurrency markets have crashed. According to crypto experts, it is ridiculous that a hack in one of the (much) smaller exchanges like Coinrail would have such a global impact.
And while the investigation into the top four US exchanges might have some impact, it would not be so severe. After all, investigations into cryptocurrency related ventures is not unusual now as regulators try and stabilize the industry.
Bitcoin advocate and entrepreneur Alistair Milne tweeted a poll in retaliation to all these theories, asking his followers what could be the reason for the dip in the markets. He gave them four options: the Coinrail hack, the exchange investigations, the popular theory that “crypto iz ded” and “aliens”. Aliens got the most votes, basically showing how little the crypto community feels these “popular” speculations about why the markets fell matter.
According to Tone Vays, this has been expected, since he had already predicted that the cryptocurrency market – especially BTC – would fall significantly in 2018. He provided data points and analysis that proved that the bearish sentiment that the cryptocurrency markets are currently going through would be extended for some time – just like it had in 2014.
In fact, Vays is expecting Bitcoin to drop below the $5,000 market before recovery begins.