Over the last weekend, in a brief period of 24 hours, cryptocurrency market lost more than 12% of their value owing to multiple stress points in the market. According to multiple reports, the market incurred a loss of more than $40 billion USD with all the top 100 cryptocurrencies falling at a rate no less than double digits.
Given the steady movement of the market over the last two weeks, this sudden drop was surely a surprise. The attention towards this drop was drawn after reports revealed that post the CFTC’s price probe into major exchanges, all the top 100 cryptos saw a drop in prices. Following this, Coinrail, a small cryptocurrency exchange in South Korea was hacked and a lot of lesser-known altcoins were stolen.
But was it really because of the CFTC probe that the market hit so low?
The CFTC is not an enemy
If cryptocurrency wants to achieve mass acceptance, it has to give into the regulations put forth by the government. After all, regulations in matters of finances are inevitable. And as a matter of fact, the investors of the crypto world should look at CFTC as a friend since it is only working to protect their rights.
The CFTC news impacted the top 100 cryptos but the trading record relating only to bitcoin were involved. This is not surprising. In fact, all of the 4 exchanges that was targeted by CFTC, have already been providing data to the CFTC owing to the terms of the original futures listing agreement. But the original agreement was not very specific and therefore the involvement of various parties in legal issues.
It will not be surprising if the CFTC gets its way simply because it has the power and the means to do so.
Coinrail Hack
Another major event that happened over the weekend was the hack of a South Korean exchange, Coinrail. It was reported that the platform was hacked and some altcoins were stolen. But could this hack alone contribute to the loss of $20 billion USD that the market saw? Or even to half of it?
Coinrail is a minor exchange platform which is barely ever included in the list of top 100 exchanges. Its daily market trading volume rests at approximately $2.5-$3.0 million USD in a market that’s worth more than $300 billion USD.
The coins that were targeted on the exchange were ATX, NPER, and NPXS out of which the only ATX has a worth of $46 million USD. The second coin values below $6 million while the last one is quoted to be of zero value on CoinGecko.
This kind of makes you wonder if it is actually a hack or just a glitch.
What is driving the crypto prices then?
As was observed in a survey conducted by Alistar Milne on Twitter regarding the real cause behind the crash, around 9% people blamed the Coinrail hack and about 10% pointed it on the regulations passed by the CFTC. The other 81% of the people blamed the aliens or said that crypto iz ded.
But in our opinion, the drop in the market was because of a highly oversold market. A similar sell-off was observed in the month of March as well which led to a surge in prices in the month of April. It is just this pattern that is being repeated again.
This kind of capitulation (when investors let go of their securities out of frustration or fear), usually occurs either because the finances are fundamentally scary as was the case in the 2008 crisis or because the investors lose the patience to hold on to the assets anymore. This is exactly what seems to be happening and as for the details, maybe it is the aliens we should contact.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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