Fri. Aug 19th, 2022

The bitcoin price has fallen to where many investors believed it would never trade again, below $7,000. The precipitous drop happened quickly, with the BTC price tumbling from nearly $7,100 to $6,800 in less than 10 minutes. The negative sentiment spilled over into the broader crypto market. Ethereum, the No. 2 cryptocurrency based on market cap, saw its price fall 7% from $140 to $130, with the ether price currently  hovering at $133.

As of press time, the bitcoin price is hovering at $6,908, leaving many to hope that a recovery is up ahead. Others are wondering what’s to blame for the crypto market crash, and according to researchers the damage could have something to do with the PlusToken Ponzi scheme.

Source: TradingView

According to CoinDesk, the sudden drop in the bitcoin price coincided with the publishing of a report by blockchain data and analysis company Chainalysis, which unveiled unsettling details about the PlusToken Ponzi scheme.  PlusToken was a China-based crypto wallet that promised to reward users for buying PLUS tokens with BTC or ETH. It turns out PlusToken was a scam, one that  managed to receive $3 billion in crypto funds, making it one of the biggest Ponzi schemes in history.

Chainalysis was able to track “a total of 180,000 BTC, 6,400,000 ETH, 111,000 USDT, and 53 OMG (OmiseGo) that went from scam victims to PlusToken wallets, equating to roughly $2 billion.” It turns out that as many as 20,000 bitcoins and 790,000 ETH are spread across thousands of cryptocurrency wallets. The scammers were able to liquidate $185 million in bitcoin in the OTC market.

Meanwhile, half-a-dozen arrests have been made in the PlusToken scam, the timing of which came days before bitcoin reached its 2019 high of nearly $13,000. The bitcoin price has been on a downward trajectory since. Chainalysis  is willing to bet –

“[Those] cashouts cause increased volatility in Bitcoin’s price, and that they correlate significantly with Bitcoin price drops.”

‘Bitcoin Is Winning’

Despite the precipitous drop in the bitcoin price, cryptocurrency mainstream adoption appears to be only a matter of time and is showing green shoots of adoption. Lebanese-American Nassim Nicholas Taleb, former options trader and author of “Black Swan,” in recent days directed investors toward safe-haven assets including cryptocurrencies and gold, telling them to avoid Treasury bonds and stocks.  Taleb is quoted in Economic Times as stating:

“You cannot ignore the crypto currencies, particularly the bitcoin story and blockchain. I see cases of countries where people no longer trust the banking system because bureaucrats are not sophisticated enough compared to the bottom up collective intelligence built into this that monstrous embedded knowledge. Central banks may no longer be in control of monetary policy because these cryptocurrencies may dominate. Currency without the government is great.”

He adds that even if the bitcoin price collapses, the use case of the leading cryptocurrency will go on. His payments company accepts BTC as a method of payment, and he believes that given the Lebanese government’s currency controls, bitcoin can flourish in the Western Asian country.  And while the industry must still combat scams including Ponzi schemes such as PlusToken, it’s no worse than what some governments are doing. Bitcoin, Taleb says, is winning.

By Dov Herman

Dov is a Blockchain and Forex trading enthusiast, who spends most of his time trading and examining software who are related to cryptocurrencies and forex trading. You can follow on Dov’s reviews and articles here on TrustedBrokerz and across the web.