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BCH Split and SEC Action: Analysis of $50 billion 5-day Crypto Meltdown

27% has been sheered off the value of Bitcoin in the past 5 days, with the world’s premier cryptocurrency crashing to below $5,000USD for the first time in over 13 months.

The cryptocurrency market has collectively followed suit, with $50 billion being wiped from the sector’s total marketcap during the same period.

 

coinmarketcap nov crash

 

Considering the relative calm within the market for the past few months, analysts and investors are struggling to explain the reason for this week’s pronounced downward trend.  A drop in the price of Bitcoin below $6,000 late last week is significant as that figure has been seen as a long-term floor, with all previous attempts from bears to move below this barrier being rejected.

While many skeptics of the hype that surrounded digital currency and blockchain see this as an inevitable return to more realistic levels, many more still within the industry are suggesting that a power struggle within the ranks of the world’s 5th largest cryptocurrency, Bitcoin Cash, may be to blame.

But what are some of the factors which are playing into the current situation, and what’s the general sentiment surrounding the price action of the past 5 days?

 

The Bitcoin Cash Civil War

For months a rift between the playmakers of Bitcoin Cash has growing, which culminated last week in the second major hard fork to hit the industry in just over a year.  The dispute leading up to this had been highly publicised, and has provided investors with the impression of an industry in disarray.

From Bitcoin Cash has come two new currencies: Bitcoin Cash Satoshi’s Vision [BCHSV] and Bitcoin Cash ABC [BCHABC].

Most tellingly in relation to the recent crash, comments made by the founder of BTCSV, Craig Wright, demonstrate the mentality of the power brokers of this war:

 

Oh. And @JihanWu and @rogerkver selling… they will also have to sell BTC to pay rented hash.

If this is a long war… expect 2014 prices in BTC… think what that does…

Have a nice day

 

Nvidia Stock Collapse Connected to Crypto-Mining

 
nvidia hq
 

Nvidia shares hit a new 52-week low this week, following a 50% drop in value from $289.36USD on Oct 1st to $144.70USD at time of publishing. In reaction to soaring prices in the 2017 cryptocurrency market, the tech giant bet on a long-term increase in demand for mining hardware, which has led to the over-production of 300,000 mining GPUs by the company.

Although the negativity surrounding Nvidia’s stock collapse comes about as a result of 2018’s long standing bear market, the news this week also works to further damage the fragile confidence that many investors have in the state of the market currently.

 

SEC Action against ICO Operators

For much of this year there has been the anxious expectation amongst many in the industry that SEC action against a number of ICO operators was imminent.  This week news broke that the regulatory body had imposed civil penalties on CarrierEq and Paragon Coin, ordering the repayment of raised funds to investors to the tune of $15 million and $12 million respectively.

This has created further unease within the market, and raised the likelihood of further similar actions to be taken on other ICO operators.  In addition to the repayment of ‘harmed investors’, the SEC has order both organisations to pay penalties of $250,000 and to file regular corporate reports with the governing body.

 

In this time of turmoil, there is still widespread confidence in the long-term utility and opportunity within the cryptocurrency market.

Netherlands-based global auditing giant, KPMG, released a positive review on cryptocurrency on Nov 15th.

While the report titled “Institutionalization of crypto assets: Cryptoassets have arrived.  Are you ready for institutionalisation?” states that cryptocurrency is still “far away from a store of value”, it also points out that “Achieving product-market fit is a journey, and cryptoassets are promising but mostly early stages of this journey”.

The potential impact of a widespread move by institutional investors into the cryptocurrency market could have a significant impact, not only on total value and trading volumes, but perhaps more importantly, on the robustness of the systems in place to support the market.

In other signs of positive developments for the market, Switzerland has become the first country to approve the first Bitcoin ETF, offered under the ticker $HODL by Amun Crypto and Swiss Exchange, Six.

For the most part, it remains to be seen whether the current contractions of the cryptocurrency market are the beginnings of renewed downwards momentum towards lows not seen since prior to 2017’s ICO boom, or the signs of the final death throws of this years extended crypto-winter.