Just as crypto traders were starting to speculate how the Consensus 2018 event might affect prices, the market fell sharply with leading cryptocurrencies seeing double-digit declines. At the time of writing all the top 10 coins, except bitcoin were down at least 10% during the day with EOS being the biggest loser, down almost 18%.
Bitcoin started the day trading around $9,120 and was down to $8520 by early afternoon. The 7% fall was much less than other leading coins but a significant drop nonetheless. During Q1 2018, bitcoin prices fell by 65% to $6,500 before a major upswing in April, which saw the price top $10,000 in early May. After the rapid ascent from the Q1 lows, a retracement was expected by many investors, and this began to materialize during the second week of May. From May 6 – 10, bitcoin declined around $600 from $9,900 to $9,300, or 6%, making the overall fall for the week 13%.
Reports are starting to circulate that the Mt. Gox bankruptcy trustee is again to blame for the steep decline in crypto prices. The trustee has previously stated that he doesn’t sell bitcoin and bitcoin cash on crypto exchanges and the funds he has raised for the creditors have been via over the counter (OTC) sales. Nobody is sure if he is using OTC sales, but coins have moved from known Mt Gox addresses in the days leading up to the decline. As the trustee was held responsible for most of the Q1 2018 declines, it’s unlikely that he would continue to use crypto exchanges, if he ever was using them. Unfortunately, as the Mt, Gox addresses are closely monitored, then any movement will continue to make the markets jittery.
In the days leading up to the 13% decline, 87-year-old Warren Buffett reiterated his stance on bitcoin by stating it was “probably rat poison squared.” Several pundits hit back against the comments made by the veteran investor, but Warren Buffett is still taken seriously by many institutional investors. It’s unlikely that his venomous comment had that much impact on the price of bitcoin as he is well known as anti-crypto.
The most probable reason for the heavy fall May 11, 2018, was the breaking news that South Korea’s largest crypto exchange, UPbit, had been raided by authorities. UPbit is the fourth largest crypto exchange in the world, and the Seoul Prosecutors Office has suggested they are investigating a case of embezzlement by one of the UPbit executives. A notice, in Korean, on the UPbit website translates to “[the company] is currently under investigation by the prosecution, and we are working diligently” and “services such as all transactions and withdrawals are operating normally. Your assets are kept securely in your account, so you can rest assured …”
The crypto markets have stabilized since UPbit issued the statement, and it’s too early to tell if it will have any medium-term effect on prices, but the biggest fall of the day did coincide with the first Tweets posted by leading crypto influencers.
Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.