Bitcoin has been experiencing some form of stability over the last few months. It has even been viewed healthy by crypto experts since businesses are hesitant to adopt mainly because of its volatility. For a few months, Bitcoin has been coasting $6,200 to $6,500. However, on Wednesday, things went south and “things exploded” as how BKCM founder and CEO Brian Kelly calls it.
Joe DiPasquale who works as CEO for Bitbull Capital, thinks that “Today’s sharp drop in Bitcoin price is a result of both the Bitcoin Cash dispute and the increasing pressure on the 6K price point”. He also believes that investors are most likely going to have a “wait and see” approach.
Kelly believes that the recent drop was because of Bitcoin Cash, which is a cryptocurrency that broke away from Bitcoin in 2017 with a goal to make transactions faster and better. Kelly describes the hard fork as “effectively a software upgrade”. He said that “When you do a software upgrade, everybody usually agrees. But in this particular case, everybody is not agreeing”. He considered this scenario a “crypto civil war”.
A Short-Term Drop or a Long-Term Drop?
One of the biggest concerns according to Kelly is that there will be “chaos” after the software upgrade. This means that people are starting to sell. Kelly said that it was “the entire market sell-down”. How long exactly is it supposed to last? For Kelly, it is a “very short-term” event.
For Meltem Demirrors who is the chief strategy officer at CoinShares, she mentioned that there are a number of events that have “piled up” leading towards the recent drop. He also added that there were some people who were “taking some money off the table”.
She also discussed that “I think all other assets that are not bitcoin are in the midst of a liquidity crisis”. She added that “What we’re seeing across the board is asset prices are down 75 percent or more, in some cases 95 percent”. She thinks that “projects are running out of money”.
The Worst for Some Projects is Yet To Come
What it means is that there are some projects that are going to get worse. She predicts that in order to save resources, some projects are going to “start firing employees”. She also said that “You’re going to see consolidation and some of these assets, inevitably, will get marked zero”.
Bitcoin was able to stay within the $6,200 to $6,500 limit for the past months making it less volatile than tech stocks. There were even some experts like Mike Novogratz who thought that Bitcoin already bottomed.
There were also other factors such as the tech stocks sell-off that may have trickled into the crypto market. If you are going to ask Eric Ervin who is the CEO of Blockforce Capital, he considered the price movement to be “purely technical moves”. He also mentioned that he is “looking forward, today’s price drop may be a blessing for the asset as it could help push the market to a bottom, after which it can bounce back”.