Bitcoin (BTC) is facing pressure as it tries to avoid sliding deeper into the red. It is, however, looking like it will happen, with many within the crypto circles fearing it is set to plunge even further away from the $8k price over the weekend. Currently trading at $7458, the top crypto is more than $2k lower than it was at the beginning of May.
Bitcoin’s value, the leading cryptocurrency by market capitalization, has slid by about 8% over 7 days and 2% in 24 hours, to a new month-long low price of $7,331 on Thursday. According to the coinmarketcap.com, BTC traded at a high of $7,738 before closing the 24 hour trading period at $7,585. The downtrend hasn’t relented today as its value has dropped by 2.86% on the hour to dip below $7,500 again.
Although this isn’t in any way strange, it’s nevertheless worrying for the whole market. If BTC continues to slide lower, the rest of the market will be sucked into the same pattern. And the decline that has left digital assets trading sideways may yet linger. The only cause for optimism for many investors would be that the coin can recoup the above value within a couple of days if it recovers.
Regulatory uncertainty goes on
Bitcoin prices are swaying following recent reports that the Department of Justice together with the US Commodities Futures Trading Commission (CFTC) was investigating the allegation of cryptocurrency price manipulation. The regulators are trying to piece together information that some traders may have engaged in price manipulation.
The alleged manipulation seems not to ring a bell with some in the crypto industry. BitBull Capital founder and CEO Joe Dispasquale is quoted on CNBC as saying: “I have not seen any evidence of price manipulation in bitcoin markets, but am certainly in favor of increased oversight, as it can only help to instill further confidence in the crypto markets.”
The reports first brought out by Bloomberg say that investigators are training their eyes a resurgence of banned trading tactics. It is known that certain illegal tactics have been employed before in mainstream trading which have evidently resulted in major price swings.
One of these banned tactics is the so-called spoofing. It is a trading strategy that involves traders submitting fake transactions that hoodwink other traders into buying or selling. The other tactic could be wash-trading. Again, this tactic involves traders. An individual engages in simultaneous buying and selling of the same cryptocurrency, creating a false image of high activity which results in duping others to either sell or buy.
The reports of an on-going investigation have been made public by neither the Department of Justice nor the CFTC. However, it’s within the public knowledge that the regulatory bodies have in the past looked into illegal activities associated with Bitcoin.
It’s such knowledge that has some within the industry or those who wish to get in believing that it can be a good thing going forward.
According to Tom Lee, “These actions signal that ‘adult supervision’ is coming to crypto and adding such oversight incrementally improves the structural integrity and legitimacy for the crypto-currency investor,”
Lee has maintained that Bitcoin (BTC) will hit the $25,000 price by end of 2018. This is despite the current decline and the failure of the crypto market to rally after Consensus 2018 or Blockchain Week as he had predicted.
The same belief that the market will eventually rally is opined by Matthew Roszak. He is the co-founder of Bloq, a blockchain company, as well as being the Chamber of Digital Commerce chairman.
“The crypto market is still in its infancy – we are in the stone ages comparatively — and very sensitive to news and manipulation,”
Bitcoin and cryptocurrency, in general, are very sensitive to news, and some people may take the advantage of there being no stringent regulations to engage in manipulative activities. These illegalities have forced authorities to warn the public against blindly engaging in crypto trading of BTC and altcoins. This is especially true of the fact that baseless hype may be used to create demand and hike prices and vice versa.
Bitcoin (BTC) prices may slide below $7,000 this weekend if other factors add to the negative sentiment. It’s also possible a positive nudge may see it hold to break above $77 again before the weekend ends. What many should prepare for though is to wait a little longer before the whole market recovers.