Why the Crypto currency market got wrecked, again?
For the past couple of days we witnessed another huge dump on the crypto market. Many people started panicking and asking questions such as why, what are the news?
In my opinion the dump was caused by a string of unfortunate events and FUD news. The following article will emphasize the news that caused the dump and reflect on them. So, let’s get started…
The first dose of FUD came from the SEC. The U.S. Securities and Exchange Commission published a statement concerning cryptocurrency trading exchanges. According to the statement, most of the trading platforms list currencies that are seen as securities under the federal securities laws. For the safety of the users, these platforms should comply with the SEC and be officially registered. The commission reminded once again to the people trading crypto that if they want protection for their digital assets, they must only use exchanges that are officially registered.
The statement caused a massive social media break-out in which people misinterpreted the press release and started spreading fake news that SEC will shut down trading operations of exchanges that are not registered. In my opinion, this is just an instructing reminder from the SEC which purpose is to generate more conscious and careful traders. In other words, the SEC want to open the consumers eyes, not close trading platforms.
The Japan news
According to the famous and beloved news outlet Reuters, the Japan authorities will take juridical actions against some cryptocurrency exchanges, which do not comply with the anti-money laundering measures of their Financial Services Agency. An undisclosed but well-informed source told Reuters, that the Japan government will most-likely shut-down several exchanges. The punishment act will be just a temporarily measure, which purpose will be to give the exchanges time to create the necessary procedures for customer protection. Although the exchanges which will be targeted remain undisclosed, the story further reiterated the market sentiment and contributed for the sudden drop in the crypto market.
Whales dumped BTC worth over $400 million
The rumors that random whales simultaneously dumped BTC were not precisely true. In fact, on the 7th of March, there was an official statement from the Mt. GOX trustee named Nobuaki Kobayshi, in which he described details of around $405 million worth of BTC sell over the course of the past two months. In other words, the dump was not sudden or unexpected, instead it has been ongoing for two months, but the actual details were announced just yesterday. This was another story completely misunderstood by the public that happened on the same day in which other FUD stories aroused, causing further turbulence in the cryptocurrency market.
Binance got HACKED
The final nail in the coffin was the alleged Binance hack. Let’s clarify before continuing: BINANCE WAS NOT HACKED. What happened is that a third-party trading bot got hacked and following a well-organized and planned hacker’s attack some Binance users got all their funds converted into BTC and then immediately placed buy orders for VIA crypto currency. Afterwards, the price of VIA pumped almost 100 times, while the hackers accounts were on the platform selling right there on the top. Luckily Binance froze those accounts, so no funds were withdrawn. Here is the official Binance statement.
To sum up
All of this happened on the same day, which in my opinion caused the huge dump we experienced yesterday. Many news outlets misreported the SEC story as well as the alleged whale dump, these two stories combined with the uncertainty surrounding the Binance problem made weak hands exit.