According to research carried out by The Crypto Fam, the reason for the current bear run is down to Bitcoin price manipulation. Bitcoin began its descent from all-time highs in December 2017, the same day that Bitcoin futures were launched on the Chicago Mercantile Exchange (CME). Over the next six months, the price of Bitcoin would see lows of $6000. It is now in the $7000-$8000 region.
The theory outlines how large traders had stocked up on BTC before the launch of Bitcoin futures. The ensuing bear market consisted of three major downturns when large traders are held to have shorted the asset. Each downward movement is held to have followed a similar pattern with a fake dump, a failed rally, and then a major dump. The reason each downward spiral is less drastic is that the whales were running out of BTC to short and the power to lower the price was reduced.
A US Federal paper has indicated the role of these futures in the December crash, which is potentially what has led to the recent DOJ investigation into Bitcoin price fixing. Market price fixing is not a new phenomenon and also happens in the fiat financial markets, the most notable recent event being the Libor Scandal. These traders were able to get away with serious market fixing for years before being caught with some reports suggesting the Libor scandal had been common practice since 1991.
The Crypto Fam is optimistic about the current situation. According to The Crypto Fam, “The bear market is running out of gas,” citing the fact that the supply of BTC held by these market manipulators has declined since the initial downward spiral on December 17. They also mention that short sellers have significantly more power in the cryptocurrency markets than in other industries. Because significant amounts of BTC is lost or kept for the long term, the amounts that are traded will have a greater overall effect on the price. The vast majority of BTC is lying idle in lost wallets or long-term storage. If Bitcoin was used by more people as a basic means of exchange for goods and services, this type of short selling could not have had such a drastic impact on the price.
The Crypto Fam is a group of cryptocurrency enthusiasts who aim to demystify cryptocurrency and enhance awareness of the space. They announced the results of their Bitcoin price manipulation findings via Twitter.
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