Bitcoin, over the last few weeks, has been floating around the $9,000 mark. It is due to the news that institutional investors are now looking to participate in the market. However, it slipped below $9,000 again right after South Korean officials raided Upbit, one of the largest cryptocurrency exchanges. And just right after the raid, Bitcoin lost as much as 6.4% and went as low as $8,508.
In addition to this, the total market capitalization for cryptos dropped to somewhere around $380 billion after the news broke out. That is around $100 billion less than what it’s worth just a week ago. There is also speculation that the trustee of Mt. Gox is now selling Bitcoin in order to pay its creditors.
Tough Loss for Cryptos
If you will look at other cryptocurrencies, each of top 25 digital currencies experienced a bearish trend. Despite the loss of Bitcoin, there are other cryptocurrencies that crashed twice as hard. Ripple, for instance, dropped by 12.8%, while Bitcoin Cash dropped by 13.8%.
If you are going to ask digital currency investor Marius Rupsys, he mentioned that “the main reason seems to be Upbit news”. He added that “Most are talking about it and if you look at prices in Korean exchanges, they are leading the drop”.
Not the First Time
It seems true that crackdown on cryptocurrency-related business still isn’t finished. According to authorities “Upbit is currently under investigation by prosecutors and is cooperating”. Upbit has around $1.6 billion-worth of cryptocurrency trades just in the past 24 hours prior to its raid. It is currently the fourth-largest in the world and the biggest in South Korea. Now, is this actually a sign of things to come? Or will it be just another hump for the crypto market?
It isn’t the first time that South Korea led the drop in crypto price. In fact, on January 10, South Korea raided one of their top exchanges which eventually marked a decline in Bitcoin price by around 7%. Joe DiPasquale, the CEO of cryptocurrency hedge funds BitBull Capital mentioned that “As is often the case, an event that should rightfully cause turbulence in a specific region seems to be creating shockwaves globally. The Upbit raid is not the first of its kind, and the markets overreacted in past similar instances as well. As the market continues to mature, these events should grow fewer and farther between, and investors will grow thicker skin”.
If there is a silver lining to Bitcoin’s bearish trend, it is the fact that it was able to hold up better than other top cryptocurrencies. Analysts believe that it is due to the fact that Bitcoin is more established compared to other cryptocurrencies that it was able to hold better during this kind of scenario. According to Shone Anstey, the president and co-founder of Blockchain Intelligence Group, “BTC is the anchor crypto that all other cryptos are tied to in terms of price”.
“Bitcoin is the most stable and dominant cryptocurrency with the largest network effect. Bitcoin is the one to watch, since if it fails they all fail”.