After weeks of sideways trading, Bitcoin experienced a sudden drop in the early hours of Thursday, falling by more than $400 in less than an hour. This decline comes after different analysts predicted an imminent price breakout for the top-ranked cryptocurrency.
Stock Traders Dumping Bitcoin to Offset Losses on Traditional Asset Portfolios
The leading theory making the rounds on Twitter is that Asian traders instigated the price drop. According to many analysts, Japanese day traders were forced into selling their Bitcoin to pay for substantial margin calls in the stock market.
Indeed, Asian markets are experiencing similar declines to that seen recently on Wall Street. On Thursday morning, China’s benchmark fell to its lowest level in four years. Both the Nikkei and Shanghai Composite suffered significant losses of 3.9 percent and 5.6 percent, respectively.
The stock market decline in Asia follows the massive rout in the U.S. market that saw all three major indices plummet. The Dow fell by over 800 points, while the Nasdaq and the S&P dropped 316 and 95 points, respectively.
Some cryptocurrency analysts believe Wall Street hedge fund managers and Japanese day traders, trying to recover from losses on traditional stocks, are dumping their Bitcoin, leading to the price crash.
As always, there is the talk of market manipulation as a reason for the price plunge. According to Twitter handle “Whale Alert,” 15,000 BTC was transferred to an unknown wallet.
Bitcoin Dump Triggers Market Wide Bleeding
Bitcoin is down by more than four percent with bulls hoping the top-ranked coin can hold above $6,000. Before Thursday’s decline, all the talk has been about an imminent price breakout due to contracting volatility and the information gleaned from several technical indicators.
Apart from Bitcoin, the entire market fell dramatically, with over $13 billion wiped out from the total market capitalization. XRP leads the top-ten coins losers pack, falling by more than 13 percent in the last 24 hours.
This drop halts what had been a promising recent run for the third-ranked cryptocurrency following a raft of positive developments for the cryptocurrency. Bitcoin Cash and Ethereum also experienced massive pullbacks, dropping 12 percent and 11 percent, respectively.
This latest decline comes against the backdrop of the IMF’s comments about how the growth of the virtual currency market could destabilize international finance. These comments fly in the face of the organization’s stance earlier in the year when it said Bitcoin could help global finance function more efficiently.
Will Bitcoin be able to stay above the $6,000 price mark? Let us know your thoughts in the comment section below.
Images courtesy of Twitter/@ynakamura56, Twitter/@OTC_Bitcoin, Twitter/@whale_alert, Coinmarketcap, and Shutterstock.
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