Yesterday, on April 4, CCN reported that for the bitcoin price to uphold its corrective rally from the $6,000 region to $7,500, and to eye a move potentially to the $8,000 region, it would need to close the market at above the $7,000 mark.
However, over the past 24 hours, the bitcoin pricehas declined from $7,300 to $6,594, recording yet another 10 percent correction. While several big buy volumes were recorded on major exchanges like Bitfinex and Bithumb, the market struggled to sustain the momentum it has created over the past 5 days from March 31 to April 4.
The relative strength index (RSI), a momentum oscillator that measures the speed and change of price movements, indicates that the market has oversold bitcoin in the past 24 hours, given that the RSI of bitcoin is moving closer to the 34.6. The low RSI of bitcoin and Williams Percent Range, which also determines the momentum of the market, evidently show that the market has oversold bitcoin at current levels.
As it is almost always the case, no particular factors contributed to the decline in the cryptocurrency market. Bitcoin, Ethereum, and other major cryptocurrencies simply saw a decline in demand from the market, as other cryptocurrencies with the exception of a handful of small alternative cryptocurrencies also recorded large losses.
Potential factors that could have contributed to the decline in the price of bitcoin over the past four months, from December to April, could be the massive sell-off of bitcoin by two large organizations: Fortress and the Mt.Gox trustee.
According to cryptocurrency researcher Matt Odell and a report released by FT, Fortress sold over $200 million worth of bitcoin throughout the first quarter of 2018, while the Mt. Gox trustee also dumped $362 million worth of the cryptocurrency into the market. The two organizations have sold more than half a billion worth of bitcoin in a short period of time on public cryptocurrency exchanges.
If Fortress and Mt. Gox sold their holdings of bitcoin in over-the-counter (OTC) markets, it could have minimized the impact of the massive sell-off on the market. But, their use of cryptocurrency trading platforms with limited liquidity to sell the most dominant cryptocurrency in the market led to a domino effect across all exchanges, explaining the correlated movements in the market.
“After the SoftBank deal was announced, Fortress agreed to sell Logan Circle Partners, its fixed-income money management arm, to MetLife in a $250m deal. Two people with knowledge of Fortress’s dealing said the private equity group had also liquidated about $200m worth of bitcoin it had held in the past few months,” Arash Massoudi of FT reported.
Ethereum has more or less followed the overall trend of bitcoin over the past few months, similar to other major cryptocurrencies. But, this week, the Japanese government announced its decision to legalize ICOs and provide a channel for investors to fund blockchain projects again through token sales.
The Japanese government’s open stance towards Ethereum and the ICO market could lead to a rise in the value of tokens in the short-term.
Featured image from Shutterstock.