- By Pierre-Alexandre
May 21st, 2019
Here are the complete details of Bitcoin’s last week performance, the headwinds causing volatility, the market reaction, and everything you need to know.
- General Market Mood for Bitcoin
- Bitstamp Sell Order Triggers The Mayhem
- Interesting Discussion In The Crypto Community
- Top Recent News
- Market Reaction to the Bitcoin ETF Rejection by the SEC
- Bitcoin Market Analysis Using Omenics’ Sentscore
1. General Market Mood For Bitcoin
In the last few weeks, crypto investors poured massive sums of money to collect Bitcoin (BTC) tokens pushing its price to above $8000 levels. The Bitcoin community even overlooked some negative events like the Binance exchange hack and quickly recovered from it to push Bitcoin to new highs.
But last Friday, May 17, Bitcoin entered a massive correction due to a major sell-order on the Bitstamp crypto exchange. Although things seem to have settled down quickly as Bitcoin regained its price over the weekend and is currently trading close to $8000 levels as we can see from the chart.
At the press time, Bitcoin (BTC) is trading at $7789 with a market cap of $140 billion. The world’s largest cryptocurrency is witnessing strong trading volumes of $24 billion. Overall, Bitcoin has made 3.5% gains in the last week.
So let us take a look at some of the important events over the last week.
2. Bitstamp Sell Order Triggers The Mayhem
A few reports suggested that Friday’’s mayhem in the crypto market was triggered by a huge Bitcoin sell-order by a crypto whale on the crypto exchange Bitstamp. Reportedly, the crypto whale sold $35 million worth BTC tokens in a single order creating tremors in Bitstamp’s order book.
Although Bitstamp didn’t unveil the size of the sell-order it has acknowledged this incident:
1/2: A large sell order was executed on our BTC/USD pair today, strongly impacting the order book. Our system behaved as designed, processing and fulfilling the client’s order as it was received.— Bitstamp (@Bitstamp) May 17, 2019
2/2: We closely examine every event that causes large-scale movement in our order book and have started an immediate case investigation.— Bitstamp (@Bitstamp) May 17, 2019
The Bitstamp sell order led to a price drop across multiple exchanges, thereby triggering further orders and resulting in a cascading effect.
For example, BitMex crypto exchange is a leader in providing short-selling and leverage, thereby allowing its customers to profit from the price fall. The sudden BTC price drop triggered an algorithmic activity further triggering and liquidating several stop-loss positions and creating panic among traders.
For reference someone put a 5k BTC sell on bitstamp, which bitmex uses for 50% of its feed and it appears to have tripped some algos which made a cascade on mex.— Eric Conner (@econoar) May 17, 2019
3. Interesting Discussion In the Crypto Community
Friday’s BTC price drop was followed by a market-wide correction with the overall cryptocurrency market losing over $25 billion in a single day.
Despite the narrative that the crypto market is getting matured with time, today’s price fall suggests that it is still susceptible to extreme volatility. Although the market recovery over the weekend has covered almost all the loses. The overall cryptocurrency market cap as on date is $247 billion.
Eric Conner, a developer at Gnosis, noted that if one Bitcoin whale can result in such a huge correction, the chances of Bitcoin ETF coming to the market are less.
A whale crashes the entire crypto market 20% in 5 minutes with a single sell order on the books and people actually think an ETF is coming? 🤣— Eric Conner (@econoar) May 17, 2019
Similarly, global market analyst Alex Krüger snubbed-off the narrative that Bitcoin serves as an alternative to the instability in the traditional financial market. Citing the overnight 10% in the crypto market, he called this theory to be absolutely flawed.
We can now put aside that nonsensical narrative of bitcoin as a hedge for US-China trade wars. The move up was engineered by a handful of parties, and so was this crash. Not as sexy, I know.— Alex Krüger (@krugermacro) May 17, 2019
Speaking to CNBC, Jehan Chu, co-founder of Kenetic Capital said that we can expect such steep rise and fall to continue in the crypto market unless institutional money doesn’t flow in. He notes that institutions can help to attain further maturity in the crypto market.
However, he adds that the key takeaway from the crypto market performance in the last weeks is that the overall interest and investment continues to expand indicating “a growing core of real blockchain use and adoption”.
4. Top Recent News
- Strategists from the U.S. banking giant JP Morgan recently told Bloomberg that Bitcoin has crossed its “intrinsic” value during the recent market rally. They calculated the “intrinsic” value by considering parameters like estimated electricity costs for mining, computational power, and hardware energy efficiency.
- Bitcoin adoption in Latin American countries like Argentina, Brazil, and Venezuela continues to rise as their economies are under major stress. High inflation rate and continuous fall in the value of the native currency have caused its citizens to invest in Bitcoin in order to save their capital. The economic situation in these countries is worse to the extent that even if their citizens would have bought Bitcoin at its all-time high of $20000, they would have been better off saving their capital than storing in banks.
- On Monday, May 20, the SEC further postponed its decision on the Bitcoin ETF proposal filed by VanEck/SolidX to August 19, 2019. The SEC order comes after it rejected a similar Bitcoin ETF proposal by Bitwise. With this, the SEC continues on its stand that unless and until the crypto market deals with the issues of volatility and market manipulation, it won’t be convinced to bring ETF products to the market.
5. Market Reaction to the Bitcoin ETF Rejection by the SEC
Gabor Gurbacs, the director of digital assets strategy at VanEck, assured that they aren’t bogged down by the SEC decision and will make persistent efforts to bring Bitcoin ETF.
The VanEck SolidX #Bitcoin #ETF decision has been postponed by the SEC. We continue the hard work towards better-regulated, safer and more liquid digital assets markets. Bitcoin is too big to ignore. Vires in numeris! Public document and timelines: https://t.co/F9cV95CHKN pic.twitter.com/hgyhVE0nJr— Gabor Gurbacs (@gaborgurbacs) May 20, 2019
The good thing is the Bitcoin community hasn’t reacted negatively to the SEC order. Bitcoin remains stable today, showing minor price movements. Below are some of the tweets from famous crypto personalities, including analysts, traders, etc.
Bitcoin is up nearly 5% since the SEC delayed the VanECK ETF two hours ago.— Mati Greenspan (@MatiGreenspan) May 20, 2019
ETF delayed (As expected)— DonAlt (@CryptoDonAlt) May 20, 2019
Don't think it'll impact the price a whole lot.
That said I'm generally hoping & positioned for lower since yesterday.
This would be a nice excuse to fill bids lower.
Generally a buying opportunity, not a reason to panic. https://t.co/mn8hqtm9g4
Deadline for the SEC to decide about the VanEck/SolidX Bitcoin ETF expires on Tuesday May 21— Mounia Rabhi, MSc. 🇳🇱 🇲🇦 (@Mounia_NL) May 20, 2019
- Delay: No major effect
- Rejection: Opportunity to buy dip
- Approval: Image below illustrates what happened after GOLD ETF approval. In other words: instant Market Buy pic.twitter.com/lbIvg3w0SV
VanEck Bitcoin ETF delayed. No surprise. https://t.co/MQgAXAtaYg— Felipe (@PhilCrypto77) May 20, 2019
VanEck ETF delayed as expected. Non-event.https://t.co/3VCdFpAYCS— WhalePanda (@WhalePanda) May 20, 2019
6. Bitcoin Market Analysis Using Omenics’ Sentscore
The Omenics Sentscore (previously known as Predicoin Sentscore) showing the overall market sentiment oscillates in response to the BTC price movement and remains in the “positive” region between 6-7.5. Thus, the overall market sentiment for Bitcoin continues to stay positive despite some recent headwinds.
On the other hand, the news sentiment chart resembles the price swings and remains in the “very positive” region between 7.5 - 10. However, across the last week, the news sentiment oscillates in the “very positive” and “positive”, and “neutral” regions. The latest price movements in BTC have caused a larger part of the crypto community talking about it.
The social sentiment remains majorly in the “neutral zone” between 4-6.
The technical Sentscore graph oscillates in the range between 7-8. The chart patterns are similar to the Bitcoin price movements and his back to the "very bullish" zone.