Some authorities think current traditional market instability lies behind Bitcoin’s (BTC) recent plunge, while others feel the alleged PlusToken scam is the cause.
Bill Herrmann, CEO of alternative investment banking firm Wilshire Phoenix, believes Bitcoin’s recent bearishness is simply due to traditional market instability. “The recent drop in the price of bitcoin is a result of the sudden and fierce decline among most asset-classes over the last several weeks,” he told Cointelegraph, adding:
“In times of extreme volatility, which is often followed by panic — most retail investors, whether it’s Bitcoin or in equities, sell first and ask questions later. Investors needed to raise cash and quickly — so everything was sold. I think that once the dust settles, Bitcoin and some other assets will be on sale.”
A number of factors have caused market uncertainty
Over the past several weeks, mainstream markets have been plagued with fear, uncertainty and doubt — partially the result of the ongoing coronavirus crisis.
The Dow Jones Industrial Average, or DOW, fell over 2,000 points on March 9 alone. Additionally, oil markets took a severe hit, falling more than 20% on the same day.
Bitcoin has faced a similar decline over the past week, falling from $10,000 on Feb. 24, down to $7,650 by March 9.
Emmanuel Goh, CEO of crypto analytics company Skew, also labeled Bitcoin’s recent price action a result of overall market activity.
“It’s in my view a function of a flight to safety that is impacting global markets on coronavirus spreading and today the oil news,” he said, referring to investors’ decisions to sell their speculative investments for more stable alternatives.
Other experts think the alleged PlusToken scam is to blame
PlusToken, an alleged ponzi scheme, saw some of its operators detained in June 2019. Since then, crypto analysts have followed wallets associated with the alleged scam, speculating that some of the groups members are still dumping Bitcoin from the operation and causing bearish price action.
A researcher who has been on the scene following PlusToken wallet transfers, Ergo, tweeted on March 6 that the alleged scam moved 13,000 Bitcoin. Bitcoin proceeded to dump in price in the days following.
Crypto YouTuber DataDash said he thinks the PlusToken ordeal is the reason for Bitcoin’s decline over the last few days.
“It might not just be that there’s global fear in the sense of traditional markets — and that might be having a weighing effect on crypto — but it might actually have to be that there’s an actual sell-side pressure that’s pretty much guaranteed to hit us eventually,” he said referring to the alleged PlusToken scam in a recent YouTube video.
DataDash added:
“It might be the time where they’re finally looking to liquidate it and finally move some of that money out, laundering it and eventually exiting it out to cash.”
It is difficult to truly determine the cause of Bitcoin’s price action at any given point in time. There is definitely an argument to be made for both sides at the moment, given the state of traditional markets, as well as PlusToken funds that may still be on the move.