From the 7th of March 2018, the price of the world’s largest cryptocurrency has been on a serious downfall. It has so far recorded a whopping $2,300 drop in its market values for the past three days.
What Could be the Cause?
There has been speculation in the market regarded some of the possible causes of the huge price drop that Bitcoin has seen over the past few days.
According to one of the online news sources dealing with financial matters, the sell-off of huge amounts of this virtual currency is one of the reasons why it price declined. The report also cited the Mt Gox trustees’ plan of throwing the remaining Bitcoin currencies valued at $1.7 billion to the market, as another reason why this digital coin has had its price fall substantially within just a few days.
The Effects of Mt. Gox Trustee Options
The idea of these trustees pumping huge amounts of Bitcoin to the virtual coin exchanges instead of dumping it in the Over-The-Counter market will continue to cause adverse effects on the future of this digital coin.
One great advantage of throwing these huge sums to the OTC market is that it gives established buyers an opportunity of trading with each other. According to Mr. Charles Hoskinson, the founder of Cardano and Ethereum co-founder, Bitcoin might have been overvalued it its price had gone way above $20k.
He explained that a short-term sell-off by one entity could have caused the cryptocurrency’s price to drop by a huge margin like the one witnessed today. He said the issue of liquidity in this market is real and should be dealt with an appropriate and professional manner.
Hoskinson even went further to demand for an index that would determine how much the market would be able to liquidate without having to crash for the virtual coins available.
Mt. Gox trustee had earlier indicated that they had plans of dumping more than $1 Billion worth of Bitcoin on various exchanges platforms. It is still not clear whether they will stick to that plan or adopt the OTC market-option and prevent any kind of manipulation in the market.
Details of the Bitcoin Drops
Within a span of 48 hours, the price of this world’s largest digital coin declined from a high of $10,600 to a sudden low of $8,300. What was even surprising was the fact that the whole market followed the trend of that price drop, as most of them also dropped.
Three of the major industry leaders; Ripple, Bitcoin Cash, and Ethereum also dropped by 11%. This was just as the same margin as that of Bitcoin.
WhalePanda, a well-known financial analyst has added their voice to other analysts who had associated the recent Bitcoin price fall with the Mt Gox trustee huge sell-off. WhalePanda stated that the controversial move by Mt Gox to sell 40, 000 Bitcoins on an exchange as opposed to an OTC platform explains why they have been referred as incompetent all these years. As indicated earlier, the 40,000 bitcoins sell-off was just a beginning of what to come later. They had indicated that they had plans of selling other Bitcoins valued at $17 billion in the next few months.