As it became known, MT Gox trustee Nobuaki Kobayashi sold 35,000 Bitcoins and Bitcoin Cash between December 2017 and February 2018.

Analysis of blockchain data shows a correlation of Bitcoin with the timing of sales by the trustee of a certain amount of funds from a bankrupt exchange, followed by a further drop in price. MT Gox's Bitcoin addresses are well known as detectives have spent months analyzing and studying the blockchain.

According to one analysis, 18,000 Bitcoins managed by the trustee were sold after December 18, when the price of 1 BTC was more than $19,000. Sales are shown on the chart for this period

Then, after waiting a bit for the market to recover, the next sale of another 8,000 BTC took place on January 7th. The market is falling again.

Since the end of sales, the price of Bitcoin has begun to recover and has almost doubled.

The fourth case of Bitcoin price collapse

According to analysts, the sale by trustees of all these funds on the exchange, instead of using an over-the-counter transaction, provoked a collapse in the price of Bitcoin by 75%.

Of course, the price crash could have been caused by other reasons, but it should be noted that Ethereum showed no significant fluctuations for almost the entire period and even reached an all-time high in January before market sentiment changed.

Thus, the Bitcoin sell-off appears to have had a specific impact on the entire cryptocurrency market, as the half-billion sale put significant pressure on the price.

It seems that this is the fourth time that the MT Gox exchange is to blame for the collapse of Bitcoin. The first collapse occurred in 2011, when MT Gox was hacked and about half a million Bitcoins were stolen.

Then in March 2013 when there was a DDoS attack, and in February 2014 when it declared bankruptcy.

The most recent collapse occurred in 2017-18, following an extraordinary decision by a trustee to sell 35,000 Bitcoin and Bitcoin Cash.

Bitcoin has been falling since mid-December 2017 – January 2018. Other altcoins are falling along with it. Panic is growing among cryptocurrency holders, people are losing money. Why Bitcoin has fallen in price and what to do in this case, we will talk today.

You can always find up-to-date information and latest reports regarding new events on the crypto market in the ““ section.

Reasons for the fall of Bitcoin

Today's fall in the BTC price illustrates how the laws of the market work. The price of an asset falls when there are more people wanting to sell than there are people wanting to buy. How could this happen?

To enter the market, you just need to register on the exchange. After the boom in popularity of cryptocurrencies in 2017, many non-professional investors entered the market.

Seeing the rapid demand, crypto exchange players decided to scalp the market. After waiting for demand to raise the price to the limit, they sold their cryptocurrency to those in need. As a result of the increased supply, Bitcoin fell, and players took profits.

Bitcoin and Bitcoin Cash

December 2013

The exchange rate has recovered after the April collapse. At this time, regulators began to take a closer look at cryptocurrencies and show their favor. New investors came to the market, exchanges simplified the process of purchasing cryptocurrencies as much as possible, which caused a new rapid rise in the rate. It was followed by an inevitable correction.

Another speculative bubble burst and Bitcoin collapsed again. The cryptocurrency began to rise after the fall, but in February-March the Mt.​Gox exchange briefly suspended servicing BTC accounts due to the division of the Bitcoin transaction log into two independent branches. This event is associated with a subsequent decline in Bitcoin until the previous price is restored.

The event seriously damaged the reputation of cryptocurrencies among the general public. People were in no hurry to invest in it, which led to prolonged stagnation. For three years, the price of Bitcoin has remained virtually unchanged.

July 2017

Since the beginning of the year, the rate has been growing rapidly, and by June it reached $3,000. Then the Bitcoin rate fell sharply to $1,800. The popularity of cryptocurrency grew, problems with scalability and transaction processing appeared, which we talked about.

A fork appeared in August. It slightly damaged the course of the original coin, but did not cause much harm. Forks are a dangerous phenomenon. If this happens often, Bitcoin will fall apart into many coins with a penny value.

By September, the coin was already worth $5,000. Suddenly, China bans ICOs, which gives rise to rumors about a complete ban on the use of cryptocurrencies in the country. These events caused the exchange rate to collapse by half.

January 2018

The resulting negative news background spurred the beginning of a bearish trend in the market. The massive release of negative news led to an oversupply in the market, which caused the price of BTC to fall. Analysts and experienced asset holders predicted the beginning of market growth in the spring of 2018.

March 2018

News has appeared online about the hacking of the Binance exchange. As it turned out later, a trading bot working with the Binance API was hacked. Because of this, accounts of traders working with this software began to purchase the VIA coin cryptocurrency, greatly pumping its rate and allowing hackers to make a profit on pre-placed VIA orders. Also, the SEC began to carefully monitor projects, without real releases (applies to many altcoins).

June 2018

• Coinrail exchange hacked - hackers stole more than $40 million.
• There is also information that the dump is carried out deliberately before the release of the new Antminer S11 mining equipment (at this time, purchases are made on the market by large players).
• In addition to all this, the SEC commission began an inspection of several large exchanges due to their suspicion of manipulating the BTC rate.

John McAfee urged on Twitter not to panic, saying that now good time to purchase coins, not to panic.

July-August 2018

The main fall in the market was the postponement of the decision of the US Securities Commission (SEC) regarding Bitcoin-ETF until September 30. Many investors panicked and began to withdraw money from the market. The rates of many altcoins have dropped to last year’s levels. Various MLM networkers call the situation on the market a “cryptocurrency restart.”

November 2018

Sharp market collapse on November 14. Closing of long positions on BitMex and a sharp decrease in the capitalization of the cryptocurrency market by as much as 20 billion dollars. Mining on old AntMiner S9 devices is becoming unprofitable for many, and the shipment of new ASIC models AntMiner S15 and T15 is planned only for the end of December 2018.

However, experienced players remain positive and continue to buy in, while many newcomers who entered over the last year leave their positions in fiat. The situation with the fall of stock markets and oil prices is especially interesting. During 2019, a cryptocurrency revolution is possible in the world, which many do not yet take seriously.

We continue to monitor the situation.

What to do when Bitcoin falls

• Don't panic and don't sell cryptocurrency. By doing this, you are guaranteed to remain at a loss. The likelihood that the rate will rise again is quite high. As practice shows, Bitcoin rose even after a 70% depreciation. You just have to wait.
• It is recommended to keep several cryptocurrencies in your portfolio. Some of them may begin to grow rapidly. A larger number of coin types increases the likelihood of making a profit.
• 30% of your assets should be Bitcoin. He is universal cryptocurrency, like the dollar in the world of fiat money. You can always buy any cryptocurrency with Bitcoin. If you see that some crypto has dropped significantly in value, you should be able to purchase it at a falling rate in order to sell it when its price rises.
• When you see a rapid rise in the rate several times, do not try to sell everything. It is recommended to sell up to 70%. This is enough to recoup the investment and make a profit. The remaining 30% will lose value if Bitcoin falls. You will not lose anything since you have already withdrawn your profit, but you will have the opportunity to make even greater profits if the rate continues to rise.

Having studied the history of falls, a pattern can be identified: Bitcoin began to fall every time after rapid speculative growth, which is a consequence of the laws of the market, combined with negative events in the field of cryptocurrencies. For example, after the bankruptcy of exchanges or aggressive behavior of regulators.

Having fallen, Bitcoin has always risen and reached even greater heights. Sometimes it took months, and sometimes it took weeks. We hope our explanations of why Bitcoin fell in price and recommendations on how to behave during cryptocurrency collapses will help you avoid mistakes and save your funds.

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Bitcoin halving 2020: what is it and how will it affect the price - 1 year until miners’ rewards are halved

Bitcoin collapse included in Saxo Bank's list of "shocking forecasts" for 2018

Saxo Bank experts have published a traditional list of provocative and shocking predictions for 2018, including, among other things, the collapse of Bitcoin.

In 2018 world economy a wave of shocks awaits, which may include the weakening of the independence and control of the American and Japanese central banks, the collapse stock index S&P 500, political tensions in the European Union and loss of investor interest in Bitcoin.

Saxo Bank's forecast is a list of expected events whose actual probability should be considered to be 10% or higher.

“We believe that the suspiciously low volatility of 2017 will not be repeated. The economy and stock exchanges seemed to be storing up energy for the shocks of 2018. Therefore, some of our forecasts directly point to the threat that the accumulated excessive financial “complacency” will lead to the “volatility bubble” exploding,” the document says.

One of the main events of the next year, according to Saxo Bank, will be the weakening of the independence of the US Federal Reserve System (FRS).

“Historically, the degree of independence of the US Federal Reserve has been determined by the needs and policies of federal government. It is expected to weaken significantly in 2018, as Washington plans to limit government revenues in the face of the threat of a market collapse debt obligations“, experts suggest.

The situation will be exacerbated by the lack of fiscal discipline and the huge budget deficit resulting from the Republican tax cuts, which will only worsen as the US enters a recession.

Bitcoin crash

As Saxo Bank predicts, the policies of Russia and China regarding cryptocurrencies will ultimately lead to the collapse of Bitcoin, although significant growth will await it before that.

“Throughout most of 2018, the Bitcoin price will continue to rise, and grow rapidly, but Russia and China will ultimately cause its collapse through their actions,” analysts say.

Saxo Bank predicts that at some point in 2018 the price of Bitcoin will exceed $60,000, and the market capitalization of the first cryptocurrency will be more than $1 trillion.

“However, very soon the phenomenon called “bitcoin” will have the ground pulled out from under its feet: Russia and China are quickly leaving the game and even banning unauthorized cryptocurrencies. Russia becomes an official player in the cryptocurrency field to influence the development of protocols, and shifts the focus away from Bitcoin in order to retain Russian capital in the country. China is acting similarly,” the forecast says.

As a result, according to experts, by the beginning of 2019, Bitcoin is expected to plummet to $1,000.

Nefteyuan, the fall of the S&P 500 and “domestic” quarrels in the EU

Also included in Saxo Bank's list of shocking predictions is the start of oil contracts in Chinese yuan on the Shanghai International Energy Exchange, a move that will have huge geopolitical and financial consequences.

A fall in the S&P 500 index is also predicted, akin to the collapse of 1987, and it will be associated with a reduction in the balance sheet of the US Federal Reserve and the volume of purchases of ECB assets from January 1.

Saxo Bank believes that 2018 will see increased diplomatic tensions between Western and Eastern Europe due to expat issues, migrant quotas and democratic values, while next year we will witness an unexpected renaissance in South Africa that will lead to political and economic prosperity for the region.

Another prediction concerns women in business: according to Saxo Bank, they will rapidly seize power in corporations. Already, women often have more high education, and if today representatives of the fair sex dominate 32 companies from the Fortune 500 list, in 2018 there will be twice as many such corporations.

“We can say with confidence that if any of our predictions come true in 2018, the world will find itself in a completely new situation,” the forecast notes.

Let us remind you that exactly a year ago, Saxo Bank added to the list of “provocative forecasts” for 2017. However, even then, experts believed that the cryptocurrency would rise in price to a maximum of $2,100.

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The Chinese Shanghai Composite indicator, in turn, grew from January to October 2007 by 113%, to 5954.7 points, and then went into decline, which ended only in October 2008 at 1728.79 points. In total, the index lost approximately 71% of its capitalization. The collapse was triggered by the Chinese government's intention to tighten control over the influx of speculative capital into China stock market, which has increased significantly since the beginning of 2006. The situation that developed on the Chinese stock exchanges on the eve of the fall in quotes is considered a classic bubble.

The dynamics of some other exchange assets developed according to the same scenario, for example, WTI oil futures in 2008 and contracts for the supply of cotton in 2011, adds DianKemala. In all cases technical analysis indicated the presence of a price bubble in these markets.

Analysts investment bank Goldman Sachs partly confirms the trader’s conclusions about the imminent decline in the cryptocurrency rate. Goldman Sachs Chief Technical Analyst Sheba Jafari, in a letter to investors sent out on Sunday, August 13, predicts that Bitcoin will reach $4,827 in the short term, after which the uptrend will reverse and the cryptocurrency could fall in price to $2,221. True, in his review Jafari does not name current situation in the Bitcoin market with a classic bubble, noting that the cryptocurrency rate will fall as part of the correction - this suggests the possibility of its return to the current price level.

Experts interviewed by RBC agree that it is premature to talk about a bubble in Bitcoin. “The figure indicated on the chart could have been drawn with the previous rounds of Bitcoin growth, and it would have looked complete,” comments Andrey Khokhrin, head of the department for working with wealthy clients at Zerich Capital Management. The financier admits that the explosive growth of Bitcoin in last year- this is a temporary phenomenon that will most likely end within the next month, but he doubts the very likelihood of a subsequent prolonged fall in the cryptocurrency.

“The end of growth for Bitcoin is not a fall to nowhere. After all, Bitcoin is means of payment, and any currency strives for stability, which is well confirmed by practice,” says Khokhrin. According to his estimates, after the drawdown, the Bitcoin rate will recover to the same or even higher levels and will gradually begin to fix on them. The further dynamics of Bitcoin will be more moderate, since the growth in demand for this cryptocurrency will be compensated by the limited possibilities of its production (that same mining) and the emergence of new digital assets, the financier notes.

System trader and asset manager investment company S.R. Solutions Roman Andreev, in turn, argues that technical analysis does not work well in relation to cryptocurrencies - these assets appeared relatively recently, so there is not enough statistical data on them yet. A full-fledged pool of regular investors in these instruments has not yet been formed. Nevertheless, the financier is convinced that there is now every reason to predict a fall in the Bitcoin rate. In his opinion, cryptocurrency prices will soon decline and fluctuate in the range of $2-4 thousand. But a real collapse could happen much later. “This will happen when the authorities of most countries in the world decide on the regulation of cryptocurrency, which will limit the room for maneuver for speculators,” he explains.

Managing partner of United Traders, Anatoly Radchenko, however, emphasizes that so far the dynamics of Bitcoin cannot be predicted by any market methods. “There are too many unknowns, it’s strange to talk about it. When the value of an asset moves 100% per month, the probability of guessing its movement is extremely low. There are no fundamental factors that determine the value of Bitcoin; the negotiability of the asset depends on the whim of governments. There is nothing stopping it from costing zero dollars, as well as $100 thousand,” the trader sums up.​

Atlantico: As The Telegraph writes about the current Bitcoin trading frenzy, “If this is a bubble, we are now dealing with a manic phase before a crash.” With volatile Bitcoin trading above $11,000 this week, what is the risk level of a currency that Goldman Sachs now treats as a “commodity”?

Philippe Crevel: In 2016, the Financial Markets Authority noted that 90% of investors who reached financial market, ended up losing money, in some cases significant amounts. It is likely that the same thing will happen with Bitcoin, a cryptocurrency whose exchange rate is far from stable and predictable. Is it possible to imagine that the value of the euro will increase tenfold in a few months? Currency is primarily a standard, an instrument of exchange and storage, and not a speculative commodity.

By the way, it was for this reason that in 1976 currencies were freed from their peg to the dollar and a floating exchange rate was introduced.

At the same time, this virtual currency, which was created in 2009 by a group of unknown specialists under the pseudonym Satoshi Nakamoto, is characterized by chaotic fluctuations, which is especially noticeable against the backdrop of the recent rise in its rate. Such a trend should be based on rational economic considerations such as GDP growth, population, increased productivity, trade links... As for Bitcoin, transparency is built into its structure, but this is not the case for its creators.

Bitcoin is a cryptocurrency that is based on blockchain technology and is accompanied by payment system p2p. Everything works without central control, in a decentralized manner thanks to the consensus of all network nodes. The issuance of bitcoins (the cap is set at 21 million) is carried out by users who provide their available computing power to verify, record and encrypt operations on blockchains. This activity is called “mining” and requires significant computing power and energy consumption. As Reuters wrote, in 2015, Bitcoin networks used 43,000 times more electricity than the 500 most powerful operating computers in the world. In 2020, it could require 14,000 MW, which is half the electricity consumption of New England in the US or the whole of Denmark. Given the exponential growth in production costs, Bitcoin creators are uniting in “farms”. In 2016, 95% of activity came from a dozen cooperatives. China is slowing down the use of Bitcoin, but has become a specialist in its production (72% of all mining). They decided to develop this area of ​​activity in Russia as well.

In the future, Bitcoin will in any case need to change its algorithm to reduce energy costs. Lack of transparency in terms of release is another weak side virtual currency. Regarding fraud, all transactions are verified by network nodes and recorded in a public ledger, which is considered impossible to falsify (blockchain principle).

If we return to the risks associated with Bitcoin, given the current exchange rate, they are very high. The bubble can burst at any moment. Those who are not afraid to take risks need to be ready to sell their cryptocurrency at any time as quickly as possible.

— French laureate Nobel Prize in economics, Jean Tirol considers Bitcoin a pure financial bubble. Most agree with this point of view. What then is the reason for the current growth? Do you know who invests money in Bitcoin?

— Bitcoin's fluctuations and its recent rise are giving it greater visibility and pushing some financial institutions to the formation of new types of deposits with an emphasis on their profitability. Bitcoin is being used by an increasing number of economic actors. So, in 2017, more than 100,000 sites accept it as a means of payment, including PayPal, WordPress and the travel agency Expedia. The Red Cross and Greenpeace also accept donations in Bitcoin. Bitcoins can even be obtained in physical form with 1,778 distributors in several countries. As for Europe, in the Netherlands there are as many as 15. Bitcoins are of interest to merchants who are interested in payment security. In addition, related expenses, which depend on the number current operations, are entirely the responsibility of the buyer.

At the beginning of November, the CME Group announced the imminent introduction of futures contracts in Bitcoin. Some believe that their appearance strengthens the legitimacy of Bitcoin, while others see it only as confirmation of the highly speculative nature of the cryptocurrency.

Context

Cryptocurrency will help revive the gold standard system

Le Monde 11/26/2017

Will the “bubble” of raising capital using cryptocurrencies burst?

InoSMI 07/30/2017

Bitcoin is banned in Russia

The Wall Street Journal 01/28/2014

Kazakhstan is eyeing cryptocurrencies

EurasiaNet 09/06/2016 Enterprises, and especially startups, use cryptocurrencies to raise funds. Such operations called ICO (Initial Coin Offering, initial placement coins) rely on the issuance of digital assets (tokens, tokens) that can be exchanged for cryptocurrency during the launch phase of the project. The rarity of tokens gives hope for profit from resale, and therefore investors are always in the forefront. Unlike classic shares, tokens symbolize not a part of the enterprise, but a part of the issued virtual currency. In 2016, ICOs raised 200 million euros. This year, some put the figure at 6 billion, which is more than crowdfunding has raised in ten years.

European Market Surveillance Authority securities(ESMA) considers the growth of ICOs a real threat, especially for ordinary investors. The European Office considers such a system to be unregulated, unstable, non-transparent and unreliable in technically. Its recent press release states that “ICOs are extremely risky and highly speculative investments” and points out “the risk of losing your investment completely.” “Many of these currencies and tokens have no immediate value other than (...) their use to access a service or product,” ESMA continues, demanding (following Swiss and US regulators) tighter controls over cryptocurrencies. A number of countries have recently taken measures to restrict or ban the use of Bitcoin. Thus, China introduced a ban on transactions in bitcoins. South Korea has taken measures to discourage fundraising in exchange for tokens. Algeria is planning to ban all virtual currencies. The French authorities may also propose a legal framework for the use of these currencies. The French financial authority recently warned investors to exercise caution as Bitcoin investment offers surfaced online with incredible returns (up to 500%, some advertisements claim). It is noted that this virtual currency does not have official rate, and that the exchange takes place on the market without any regulation. The extreme volatility of Bitcoin is also rightly pointed out. As for ICOs, they carry “all the risks associated with virtual currencies: loss of capital, volatility, illiquidity, lack of clear and detailed information about the investment, lack of regulation, risk of fraud, risk of project failure or failure.”

Initially, Bitcoin was aimed at distancing itself from traditional financial circles after the global recession of 2008. Its digital and worldwide nature has given it some success, both in the legal sphere and in mafia activities. Bitcoin resembles “tulip mania” rather than a currency standard and may soon lose trust. A 2015 CIA report on the state of the world over 30 years specifically cited the risk that a network like Facebook could issue its own currency. The destabilizing consequences of such a step were considered so dangerous that such emissions were proposed to be banned outright.

— Are there precedents for such a stock market takeoff of an asset that was treated with disdain by so many players? And are there any opposite examples, when assets that caused only ridicule eventually established themselves on the market?

— Yes, tulip bulbs in 1637. The first speculative crisis of the modern era, “Tulip Mania,” flared up in Holland, which was then famous for trade, freedom of religion and speech, and was able to achieve real prosperity. Her economic growth was largely associated with maritime companies(Dutch East India Company and Dutch West India Company), which covered the territory from America to western Africa and India. As a result of trade exchanges, tulips grown in the Ottoman Empire ended up in Holland. The Dutch were simply crazy about this flower, especially varieties with tiger-colored petals. They were the most difficult to raise because they had to be infected with the virus first. The tulips were grown for almost ten months: planting took place in the fall and harvesting took place from June to September. Tulip lovers purchased them in advance, for example, in July of one year for June of the next. These contracts resulted in new financial products. Thus, a Dutchman bought an onion for 100 guilders in July, knowing that he could resell it for 200 a year later. In addition, it was possible to purchase part of the onion, just like part of the promotion today. Manufacturers quickly raised prices amid growing demand. The already mentioned enrichment schemes only contributed to the rise in prices. The arrival of gold from Indian companies led to inflation, which made it difficult to estimate the value of things. Over the course of several years, the price of an onion has increased more than 30 times. In 1635, 40 bulbs fetched 100,000 guilders (about 25,000 euros today). The growth of options led to the fact that the number of orders many times exceeded real demand, especially since the rise in prices limited the number of potential buyers. Many bought tulips at exorbitant prices without being able to resell them, which bankrupted them.

The speculative frenzy has given rise to many other crises. Railways, the Panama Canal, land, real estate and, of course, the Internet in 2000 all created the basis for speculative bubbles.

At the same time, it happens that the sources of these bubbles create conditions for normal business a few years after the collapse, but there are far fewer such examples than scandals.

InoSMI materials contain assessments exclusively of foreign media and do not reflect the position of the InoSMI editorial staff.