Bitcoin Price Drops Below $8,000 as Global Events Affects Market
March 12, 2020
The cryptocurrency market was affected by the global events that unfolded over the past 24 hours, with the Bitcoin price dropping below the $8,000 mark.
Bitcoin Price Down By More Than 5%
The cryptocurrency market suffered a slump over the past 24 hours as a few events affected the global markets. This saw the price of Bitcoin declined by more than 5% and it dropped below the $8,000 mark for the first time since the start of the year.
The fears of the coronavirus outbreak continue to hamper the traditional markets, with the Dow Jones losing 7% of its value over the past few hours. The S&P 500 also suffered a significant drawback, losing 5% of its value on Monday.
Also, with Saudi Arabia crashing the oil price to just $30 a barrel, saw the global oil price drop to around $32 per barrel. This is the lowest oil has traded since 1991. The effects of the crash in global oil prices further affected the stock market and other traditional investment vehicles.
Bitcoin should have served as a safe haven for most investors cashing out from the stock market. Instead, the crypto market plunged, and the prices of the digital currencies were affected. On Monday, 13,000 BTC were sold by China-based PlusToken and this could have played a role in the crashing of the Bitcoin price. There are speculations within the crypto space that the operators of PlusToken, an alleged Ponzi scheme, are looking to liquidate most of their holdings. This led to a further decline in the price of Bitcoin.
The head of institutional sales for digital asset management firm Koine, Rupert Douglas, pointed out that traditional safe-haven assets are also struggling at the moment. He stated that, “Everything is getting pummeled, and even traditional safe havens like gold are barely up today.” There is one asset class that people are buying most at the moment and it is the U.S. Treasuries.
However, some experts argue that the decline in the BTC price has nothing to do with the PlusToken sales and the coronavirus scare. James Hapak, an OTC trader and digital asset manager in Toronto, stated that the decline isn’t related to Covid-19 or PlusToken. Instead, mini-whales are taking orders from bigger institutions to liquidate longs at $9,000 and $10,000. They have been at it for months, he added.
Whales Liquidating BTC
James Hapak’s theory could be correct as longs worth over $190 million were liquidated on Bitmex yesterday. The event took place around the same time as when a large volume of trade was recorded on Coinbase, with over 6,300 trades executed within two hours.
Jack Tan, the co-founder of Taipei-based algorithmic trading firm Kronos Research, believes several factors negatively affected the price of Bitcoin. Tan stated that several people are saying crypto is declining because of PlusToken or coronavirus. While that might be true to a certain extent, people should know that the crypto space is controlled by groups with massive capital. He added that these events, combined with a thin market, makes it easy for prices to be manipulated to profit those group of people.
Despite the recent plunge in BTC price, the cryptocurrency is still up by 7% since the start of the year. This is better than the S&P 500 that has lost 12% of its value so far in 2020. Tan believes that the cryptocurrency market would be driven by fundamentals in the long-term. As a result of this, he remains bullish on cryptocurrencies.