There has been a lot of uncertainty in the cryptocurrency industry for a while now. Prices have been falling lower and lower against the USD. Yesterday, the price of BTC reached a new low. This only added to the anxiety and fear that is destroying the market. Everyone was wondering when the market will finally reach a bottom. While the most recent sell-off that saw BTC down by over 30% may have been as a result of the current state of the market, analysts at CryptoCompare have a different theory. According to the well-known cryptocurrency blog, the cryptocurrency exchange, Bithumb may have contributed to the drop in the price of BTC.
What Role Did Bithumb Play In The Sell-off?
Between October and November, Bithumb was leading other cryptocurrency exchanges per trading volume. The exchange was recording over $1.24 billion daily in turnover. This shows that it was increasing by 284% one month after the other. This was rather impressive especially since other top exchanges like Binance were recording declines.
Bitcoin (BTC) Price Today – BTC / USD
This kind of trading volume originally would have given Bithumb the number one spot in CoinMarketCap’s list of cryptocurrency exchanges. However, it didn’t because most of the activity wasn’t organic. Binance still remained the number one cryptocurrency exchange per market capitalization and trading volume. According to web analytics, the main drivers for the increase were the promotions “Special Gift and Super Airdrop Festival” that the company hosted.
So, even if the number of active users on Bithumb reduced, the trading volume increased within the said period. Part of the report states:
“There was a 284% increase in the trading volume recorded on Bithumb between October and November. The rise in trading volume started after BK Global Consortium, a Singapore based company bought a share in Bithumb. The consortium implemented several promotions, airdrops, competitions, raffles, etc., to entice non-korean users into signing up and using the exchange. They also implemented trans-fee mining for some users. This allowed users to enjoy rewards when they crossed a specific daily volume.”
Keep in mind that an increase in trading volume typically correlates with an increase in price or a strong price support. However, when trading volumes drop, prices tend to drop as well. What this means is that the promotions from Bithumb and some other cryptocurrency exchanges were able to support the price of BTC when it stayed above $6000. When these promotions stopped and the trading volumes went back to normal, the report suggests that the price of Bitcoin was unable to stay above this level thus falling dramatically.
Technical and fundamental analysis showed that BTC ought to have fallen below $6,000 long before it did. So, the Bithumb promotions served as an anchor that held the price at this level. As soon as the anchor was removed, the price fell. Until now, BTC hasn’t been able to recover from this downward trajectory. It has even been unable to stay above the $4000 level for long.
Bitcoin (BTC) Price Analysis
At the time of writing, BTC was trading in green against the USD at $3,464.47. This shows that it was up by 1.07%. The trading volume over a 24 hour period is $6,243,961,603 and the market capitalization is $60,324,427,498.
Right now, no one can give an accurate short-term prediction of the cryptocurrency market. While the long-term fundamentals are strong, the short-term price action is not impressive at all.