Bitcoin is undergoing a bullish correction on Wednesday, recovering as high as 10% since this week’s low at $4,200. Crypto markets are also recovering slightly.
Nevertheless, the insignificant recovery still does not compensate a whopping $70 billion that has been wiped from the crypto market since last Wednesday. The price of BTC crashed by 25%, bringing itself below $5,000 for the first time since October 2017. Other major cryptocurrencies also fell in unison. Ethereum, whose value touched $700 a few months ago, posted fresh lows at $126 on Tuesday. XRP, which replaced Ethereum for the second-largest cryptocurrency market cap, maintained its support despite the overall crypto-bloodbath, trading between a little range defined by $0.45 and $0.42 as parameters.
As the market heads for a recovery in conjunction, how long would it last is still a question without an answer. The knee-jerk upside correction could very well be the result of traders executing their short positions. It is very least an accumulation phase, not unless market bottoms out. And the factors that caused the crypto crash at the very first place still lurk around, confirming an extreme bearish sentiment.
Hash War Continues
The Bitcoin Cash hard fork, which took place after months of conflicts, birthed two competing blockchains: Bitcoin ABC and Bitcoin SV. Most of the exchanges and mining pools confirmed their allegiance to the Bitcoin ABC network. It provided the forked Bitcoin Cash a lead over its tweaked twin Bitcoin SV. But despite the clear outcomes, the losing side is not conceding defeat, still wasting resources on their and ABC’s end to continue what has been famously termed as a “hash war.”
With pools allocating a majority of their computational rate to mining Bitcoin ABC – to keep it ahead of SV – the decision affected the rest of the crypto market. Investors panicked sell their crypto holdings despite a weaker US Dollar at the other end.
The hash war continues to this date and likely to lose its say on the performance of crypto as a whole. Bitcoin SV would not keep wasting its resources in the absence of lower support from exchanges and mainstream mining pools. User adoption is likely to be lower for it as well, especially after when the news of its centralization aspects is surfacing.
The US Justice Department in its recent announcement revealed how it is investigating a case about possible price manipulation in the crypto market. Tether and BitFinex could have artificially pumped the adrenaline rise of Bitcoin to $19,000 last year, the federal investigation weighs.
The possible misconduct, in a longer run, poses crypto as an easily manipulated spot market. It leads the industry to a point where it cannot prove whether the demand for its multi-billion dollars’ worth of their crypto assets is real or else. While regulations of crypto exchanges sound like an answer, the news of price manipulation alone could jitter investors in the near-term – despite the minor recovery today.
The glass is half-full. Crackdowns on the bad actors in the crypto space certainly make it a better market for stability and investor protection. As SEC rulings on ICOs have added to the market woes, they are not the entire cause of them. The future strategies are all about bringing significant monies to the crypto market which means its underlying spot market would need to be regulated strictly. 2019 will be just the year that gives more clarity on how the global financial watchdogs would perceive Bitcoin and similar digital assets.
Image from Shutterstock
The post What Could Have Caused The Year’s Biggest Crypto Crash? appeared first on NewsBTC.