Market Situation Overview
Last week crypto market faced one of the worst decline for all the history of crypto-industry. Bitcoin became an object of the biggest sale loosing $70 billion and falling lower than $4000. Market capitalization decreased by $100 billion.
Investors around the globe are in complete panic and are selling assets as fears and confusion have taken over all financial markets.
The positive aspect is that sales pressure comes not from the crypto-ecosystem, but from traditional financial economics and external factors. Unlike stock exchange companies, bitcoin is falling because of panic reactions, not because of some fundamental factors affecting its value.
Over the past seven days, Bitcoin and digital assets have generally demonstrated a high level of correlation with the U.S. stock market, possibly due to a general decline in investor interest in high-risk assets.
The accompanying panic on the U.S. stock market, together with the lack of demand for purchases also affected the price of Bitcoin, which fell to a low of $5,000 and eventually led to a price fall to $3,600. This was the biggest daily drop in the Bitcoin price in seven years. At the time of the decline on March 12, more than $5.5 billion was liquidated on all supported stock exchanges, resulting in one of the most intense declines in the history of the cryptocurrency market.
The majority of the daily market volume of the cryptocurrency exchanges accrue to futures trading platforms such as BitMEX, OKEx, Binance Futures and FTX. This suggests that most traders in the cryptocurrency market trade the major cryptocurrencies with leveraged capital.
Long positions worth $3.2 billion were liquidated on the BitMEX crypt currency derivatives exchange, including $1.7 billion on March 12–13. Due to the huge number of liquidations, the bulls will now face a rather difficult task to protect subsequent levels of support from strong sellers’ pressure.
Please note, that on the 5-minute chart below the price of Bitcoin stopped at BitMEX, while Coinbase is growing by more than $ 1500 in 15 minutes.
BitMEX stopped trading for almost 15 minutes after falling to $3600. But soon it resumed trading, the price of Bitmex simply rose from 3600 to 4400, thus liquidating most of the positions in the shorts. At that moment, the exchange prevented its users from logging into the system and it was impossible to place a Buy or Sell order. But in the meantime, on Coinbase the rate has returned to the price level of $5500.
The main catalyzer of the sudden fall was a statement by the World Health Organization (WHO) on 11 March, which acknowledged the outbreak of the new coronavirus as a pandemic. A few hours later, prices for Bitcoin and the Dow Jones Industrial Average began to fall rapidly. The U.S. stock market experienced the strongest sell-off since 1987, dropping 10% during the trading session.
Bitcoin fell from $7980 to $5710 in a short period of time, and the next day — to $3600. With that decline the price of the first crypt currency fell by 50% in just a week.
The Coronavirus effect hit the financial industry to such an extent that even gold, which was considered to be the most secure safe haven, dropped, and that’s a really frightening situation.
As a result of the drop, Bitcoin has updated its annual low. Now the first cryptocurrency costs $4850 (the last time it traded at this level was in April last year).
Strong fluctuations have also affected stablecoins. At Binance, the value of USDS in the pair to USDT fell to $0.9, while the BUSD rate rose to $1.09. Even the Tether’s stablecoin did not resist the trend and managed to distinguish itself by high volatility.
The movement of major Bitcoin holders with a great number of coins attracted attention during the fall in the price of Bitcoin.
The wallet containing 1000 Bitcoins was moved for the first time since 2010.
According to the report, discerning Reddit users found that 1000 BTC mined in 2010 were moved from the wallet for the first time in 10 years.
Anonymous Bitcoin Miner found a wallet with coins mined back in 2010, according to his post on the forum BitcoinTalk.
When he opened the topic “Beginner comes back after a long break”, he wrote that he mined “a little of bitcoin” when it was still possible with the GPU. Miner asked for advice on how to move BTC, BCH and other forks for sale. Some of these bitcoins went to the Coinbase exchange.
The day after moving the mentioned 1000 BTC, the price of the cryptographic currency fell to $6000. The movement of a significant number of coins mined in the early years of the Bitcoin is not frequent. As of January, of the 18.14 million BTCs that had existed at that time — 60% of which had never been moved.
Another reason to “sell out” the bitcoins is the PlusToken pyramid.
According to Arcane Research, from March 7 to 8 another remarkable whale sale took place, during which 13,000 BTC whales were transferred from the PlusToken portfolio. The PlusToken pyramid has already managed to launder $1.3 billion in cryptocurrency through OKEx, Huobi and other trading platforms. At the moment, the scammers have 37725 BTC. Of these, 33872 coins have already been passed through the “mixers”.
PlusToken is the largest scam in the history of the crypto industry, having about $2.9 billion in BTC. According to previous market data, it was noticed that PlusToken wallets drop about 12,000 BTCs every month, and whenever they start selling, they affect the market value of the asset.
This time, the Bitcoin scam happened around the same time that the Coronavirus threat loomed over the horizon. This has led to a global economic catastrophe, and the situation is now clearly not playing into the hands of Bitcoin fans.
Public life is frozen in many parts of the world because of the coronavirus. It also affects the crypto industry. The upcoming EDCON in Italy has already been cancelled and the Nitron 2020 summit in South Korea has been postponed for an indefinite period.
The current panic in traditional markets is spreading to the cryptocurrency market, which should be the main reason for the current fall in Bitcoin prices. So far, the cryptocurrency has failed to establish itself as a safe haven. This is most likely due to the fact that traders around the world are closing their positions in more risky assets in order to preserve their savings using competent risk management. In addition, traditional exchanges, such as the New York Stock Exchange, may temporarily stop trading, in which case it is quite problematic to do so in the world of cryptography, as the crypt currency market operates 24 hours a day and the market reacts to global news faster ahead of other stock indexes.