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Mar 19, 2018
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Last week we saw huge volumes of selling and major support levels breaking. Most cryptocurrencies reached record lows with massive selling taking place. Price analysis shows that the huge amounts of selling overwhelmed the markets and key support levels were broken. The prices of cryptocurrencies quickly plummeted but have managed to recover a bit since then. Of course there are some reasons and some rumors that can explain the recent selling.
However there is nothing too scary, mainly large entities cashing out. Since then the market has started to recover. All green can be seen today down the ladder. There are some underperformers, like Ethereum which is slower to recover. This is not bad for those who are trading with Ethereum, as Ether prices on other cryptocurrencies spiked and some people made great trades to increase their Ether and are still making as we speak.
There were some factors and news that influenced cryptocurrency prices at some degree. One of them is the G20 summit. It is highly unlikely that the G20 convention was the biggest factor behind the recent price surge of Bitcoin. As I have written in the last price analysis, the Mt. Gox selling is still happening. People that are holding, in times like this, are the ones who will profit, not the ones who sell at the lows.
Bitcoin (BTC) Price analysis
Bitcoin dipped below 7,300$ almost on all major cryptocurrency exchanges. For less than 24 hours Bitcoin price spiked with over 10%, as Bitcoin is trading now at around 8600$. In the previous price analysis I’ve said that the graphs are forming an inverse head and shoulders graph. Well it turned out to be a normal head and shoulders because of the enormous trading volumes. The trend continued to go down with not enough support coming through. That’s why technical analysis and graphs should be analyzed constantly. Things change fast in the cryptocurrency world.
However the trend seems to be changing. Bitcoin’s dominance index is increasing since late January. Price analysis shows that it is most likely that Bitcoin will maintain its dominance over the market, especially in volatile and turbulent periods like these. As of writing this article, Bitcoin’s dominance index is above 44%. Many investors are seeing Bitcoin as a safe place to be in volatile periods.
Ethereum (ETH) Price analysis
Ethereum reached record lows at 460$, a price that was not seen for a long time now. Despite the plunging price, Ethereum saw a huge increase in trading volume. Huge volumes of support came to stabilize the currency. Currently Ethereum is trading at 560$ and has made over 15% gains for the last 24 hours.
However, Ethereum is the current underperformer. Ethereum’s price is starting to rise, but it is slower than everyone else. This is great for traders, because the Ether price of all cryptocurrencies have spiked, because of the low Ethereum price. Investors and traders who trade with Ethereum can currently sell altcoins for Ethereum at higher Ethereum prices.
Ethereum’s slower recovery and drop below 500$ can be attributed to a reported dump of 50,000 ETH on the cryptocurrency exchange – Bitfinex. The statement was made by a Twitter-famous crypto enthusiast WhalePanda:
Regarding the $ETH dump. 50k $ETH was deposited on Bitfinex 12 hours ago coming from the $EOS crowdsale. thanks @claptrapxl https://t.co/vYHTFwQgKn
— WhalePanda (@WhalePanda) March 18, 2018
G20 summit news
Some analysts have connected the recent increase in Bitcoin’s price to the announcements that were made on the 2018 G20 Buenos Aires summit. During the event, the Financial Stability Board (FSB) who are the global agency that oversees banks and financial networks and are a representative of 20 major economies, said that no additional restrictions or regulations on cryptocurrencies will be issued for now.
Regulations will be held for now as governments decided to embrace existing regulations on the global cryptocurrency market. The regulations in some regions like Japan and the United States are strict enough as they are. FSB’s official report stated:
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. The market continues to evolve rapidly, however, and this initial assessment could change if crypto-assets were to become significantly more widely used or interconnected with the core of the regulated financial system.”
Previously, several analysts stated that the upcoming G20 meetup has contributed to the decline in value of cryptocurrencies. Some of the reasons behind these statements are that investors were anticipating in the G20, the financial warden FSB to go hard on cryptocurrencies and to issue stricter regulations. The massive selling could be interpreted as precautionary actions by investors that were thinking that major economies will come together to crackdown on cryptocurrencies with heavier regulations and policies. Nevertheless the positive comments by the Bank of England that cryptocurrencies pose no risk to the stability of the global economy are welcomed by the crypto community.
The Mt. Gox Situation
As I have written in the last Price Analysis, a trustee of Mt. Gox is reportedly selling over 400$ million in Bitcoin and Bitcoin Cash and is going to sell another 1.7$ billion in Bitcoin. Mt. Gox was once a major Bitcoin exchange that is now closed. It was the largest crypto exchange in the world until February 2014 when it was hacked. This led to the loss of around 850,000 BTC. The current sales of BTC and BCH by Kobayashi are part of an attempt to refund users who lost their money in the hacking.
The trustee of Mt. Gox stated that he does not believe the sales affected the market prices of BTC or BCH. The trustee Nobuaki Kobayashi stated this in a Q&A at the 10th Mt. Gox creditors meeting. There was an earlier report released March 7 to the Tokyo District Court which stated that the sales took place between the creditors meeting in September 2017 and the one on March 7. However they released another report that shows that the selling took place between December 2017 and January 2018.
The newer report which details the amount of Bitcoin and Bitcoin Cash sold by Kobayashi over this reported two month period, leads many to believe that the large sell off is the biggest reason that led the markets crashing, after the end of last year. Kobayashi stated that after consulting with cryptocurrency experts, he sold Bitcoin and Bitcoin Cash in a manner that would not affect the market prices and will ensure the security of the transaction to the extent possible. Kobayashi made clear that he did not necessarily sell BTC and BCH at the same time as the crashing prices happened:
“Please refrain from analyzing the correlation between the sale of BTC and BCH by us and the market prices of BTC and BCH based on the assumption that the sale was made at the time the BTC and BCH were transferred from BTC/BCH addresses that I manage, as such assumption is incorrect.”
Kobayashi stated that he sold the coins at what he believes to be a fair market price and he sold them separately. It was reported by news outlets that there was a negative correlation in the short run with the selling. Kobayashi wants to refute the accusations of him being responsible for the crashes. A recent Reddit post that summarized Kobayashi’s position has gathered conflicting opinions. Many believed that just because he was transacting on a dark pool, that doesn’t mean the price was not affected. But most people can agree that running from responsibility is not proffesional.
This quote from Reddit sums it up the past week, the Mt. Gox situation and the cryptocurrency market in general: “Once you start an avalanche there is no way to control it.”
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