Bitcoin has fallen below the $7,600 mark for the first time since March 19. Earlier today, the price of bitcoin dropped to $7,530, after peaking at $8,150 less than 20 hours ago.
Throughout the past 4 hours, sell volumes intensified across all major cryptocurrency exchanges, and the market was likely affected by the spike in volumes in the US bitcoin futures market operated by the Chicago Board Options Exchange (Cboe) and CME Group.
Phil, a well known cryptocurrency analyst better recognized as PhilCrypto, revealed that the bitcoin futures market recorded record volumes over the past 24 hours, and according to the publicly available data shared by CME Group and Cboe, the majority of volumes on both futures market are sell volumes.
Initially, the cryptocurrency community viewed the launch of the bitcoin futures market as an optimistic development for the global cryptocurrency market, as the community believed it would lead to a surge in volumes and improve the cryptocurrency market’s liquidity.
Undoubtedly, the entrance of investors from the traditional finance industry through the futures market led to an improvement in the market’s liquidity. But, although the volumes of the market have increased, the futures market has had a negative impact on the cryptocurrency market over the past few months.
Whereas large-scale institutional investors were not able to take advantage of the market and manipulate the price of cryptocurrencies on exchanges, through the futures market, retail traders have started to move large sums of money to sway the market.
Realistically, some of the factors mentioned by the media such as the cryptocurrency advertisement ban by Twitter and Facebook have had minimal impact on the price of cryptocurrencies. To understand the irrelevance of the advertisements on both platforms, it is important to acknowledge the reason behind the ban.
Both platforms has banned cryptocurrency ads due to increasing advertisements from aggressive initial coin offerings (ICOs). As Nathaniel Poppers from the New York Times previously reported, the vast majority of ICOs have turned out to be either failed projects or scams.
It is only logical in the part of Twitter and Facebook to ban cryptocurrency ads unless they want to be responsible for the losses of investors, given that the government will attempt to accuse the two platforms for promoting ICOs by allowing advertisements from projects.
Hence, it is overreaching to claim that the ban on advertisements by the two social media giants or any other irrelevant factor led to the decline of the price of bitcoin and other cryptocurrencies.
As CCN.com reported on March 27, it is unlikely that the market will recover in the short-term, or in the next few weeks. Several experts including bitcoin remittance company Abra CEO Bill Barhydt stated that bitcoin will initiate a strong rally later this year, and all “hell will break loose as a result.”
“I talk to hedge funds, high net worth individuals, even commodity speculators. They look at the volatility in the crypto markets and they see it as a huge opportunity. Once that happens, all hell will break loose. Once the floodgates are opened, they’re opened,” said Barhydt.
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Last modified: May 20, 2020 8:56 PM UTC