When is someone going to tell bitcoin to slow down? Why, when it drops, does it have to do so in such grandiose fashion?
Bitcoin… You Have to Calm Yourself!
The granddaddy of cryptocurrency fell by more than $600 in less than 30 minutes yesterday, dropping from about $10,200 to about $9,600. Unfortunately, things haven’t quite stopped there. Today, the currency is down by another $200, having fallen into the high $9,400s.
The bad news is that bitcoin’s behavior seems to be rubbing off on all its altcoin cousins. At press time, many competitors to bitcoin – including Ethereum, Litecoin, bitcoin cash, EOS and Ripple’s XRP – are down for the count as well, with Ethereum trading in the low $170 range. Many of these coins have lost anywhere between five and 11 percent within the last 24 hours.
The news has got many analysts in a twist, wondering what the heck could have happened and what might have prompted bitcoin to fall so quickly from grace. Several industry experts agree that it was some sort of mass cash out, with hodlers selling some of their stashes off to purchase new bitcoin futures set to emerge this coming Friday.
Dave Balter, chief executive of Flipside Crypto Inc. in Boston, comments:
From our end, it looks like it was a sell-off to cash settle futures that are coming due on Friday for BTC.
Jeff Dorman, chief executive at Arca, explains that a lot of cryptocurrency is just sitting there in people’s accounts doing nothing, which means that even the slightest “above normal” transaction is likely to push crypto over the edge. He states:
It’s the week before Labor Day. Half of crypto is at Burning Man and the other half is sitting on their hands doing nothing. Volumes are low, and it takes very little to move markets right now, and you have big futures/ options expirations coming up at the end of the week. The only definitive thing I can point to is that the move was led by declines in EOS, ETH, XRP, BCH, LTC and other large-cap tokens that have been out of favor for months. I just don’t think there are a lot of investors willing to defend price right now.
Measuring Crypto When It Moves Is Best
This is interesting in the sense that Dorman believes bitcoin is dropping because altcoins are dropping, not the other way around.
According to one source, market cap isn’t a solid factor to determine the overall health of coin. One could purchase an asset when it’s trading at $100, but then do nothing with it as it jumps beyond the $1,000 mark. Realized capitalization, it suggests, is a far more accurate measure of determining how stable a coin is given that the asset is measured when it’s moved around.