The market of cryptocurrency has been in a state of collapse for several months in a row now, but there is still no consensus as to why this is happening. Some experts suggest that at fault is the lack of positive news on the market, while others see a problem in tightening positions of financial regulators of different countries. Author and cryptocurrency analyst Maxim Rubchenko considered another possible reason for the massive drop in the rates of most currencies. Read our material about the influence of conspiracy theories on the crypto world and who is behind them.
When a market that has been demonstrating dizzying growth for many months turns into a protracted peak immediately after you invested in "the most promising asset of all times and nations," it is hard to get rid of the thought that it was all in vain. And it is not that you wrongly chose the moment to enter the market and bought at the highest price, but that some evil forces have conspired and devised a treacherous trap specifically for you. Therefore, it is not surprising that as soon as the fall of Bitcoin went far beyond the standard correction pattern, conspiracy theories began to emerge in the circles of crypto investors, in which the blame for the collapse of the market is assigned to this or that dark force.
The simplest and most obvious hypothesis is that the market was hit by "whales" (investors who started buying Bitcoins many years ago and accumulated large amounts of the cryptocurrency), as well as large miner pools. The question why the "whales" needed the collapse of the market has not yet generated any unanimous answer. Some analysts believe that the mining giants are simply trying to squeeze out the small players from the market to concentrate the bulk of Bitcoins in their clammy hands. According to this theory, when Bitcoin approached $20,000, the "whales" began selling the coin, reducing the rate to the level of profitability of mining. As a result of the sales, they have accumulated a huge amount of fiat money, which will allow pools to mine Bitcoin for a long time even at a loss for themselves. And while the fat ones linger, the hungry die. Independent miners will be forced to turn off their farms and leave the market. In addition, small investors, frightened by the fall of the market, will start selling their coins, which the "whales" will gladly buy up. The important thing here is not even that they will be concentrating in their hands huge amounts of digital wealth, but that the opportunities for Bitcoin mining are coming to an end.
Now about 16,961 thousand coins out of the 21 million have already been mined. Given that the last half a million Bitcoins were mined in nine months, it is not difficult to calculate that the entire limit will be exhausted within the next six years. After that, Bitcoin will have to switch from the Proof-of-Work model to the Proof-of-Stake, which will give large owners additional voting rights in determining the further development of the network. In other words, after 2024, the fate of Bitcoin will completely depend on the "whales." And those who will be able to concentrate the maximum amount of coins in their hands today will receive a decisive vote in possession of digital gold in the future. The outlook is clearly worth using radical measures for a large-scale market collapse.
But this is only at first glance. After all, Bitcoin has no intrinsic value, and, consequently, its price is determined solely by demand, that is, the willingness of customers to pay for it. The three-month long collapse of rates has already scared off a significant part of potential investors from the crypto market, and it will be very difficult to revive in them the desire to buy Bitcoin again. And without this, all the coins concentrated in the hands of the "whales" will not cost anything. So it would be unreasonable for the "whales" to arrange such a collapse of the market, like the one we observed in the first quarter.
Equally doubtful is the hypothesis that the "whales" of Bitcoin have devised the winter rate collapse to destroy their competitors like altcoins. The fact is that the mining of many new and not yet well-advertised coins (such as Pirl (PIRL), Ubiq (UBQ), Musicoin (MUSIC), GoByte (GBX), and others) is much more cost-efficient than Bitcoin mining. The collapse of Bitcoin in these conditions only increases the attractiveness of altcoins in the eyes of the miners. Therefore, it is rather difficult to believe in the conspiracy of the "whales." The fervent supporters of the conspiracy theory know perfectly well that all this is just the fantasy of amateurs.
In fact, the Cartel, a secret association of the largest banks, traders, and media, which controls the world financial markets, is behind all the collapses of the markets. It was the banks participating in the Cartel that had begun actively buying up Bitcoin in the fall of last year, spinning its rates to $20,000, and then the friendly media began to conduct a coordinated information campaign against the cryptocurrency, regularly publishing negative news, including fake news. For example, the news that South Korea was preparing to completely ban the trade of cryptocurrencies was fake. It is believed that the large-scale collapse of the crypto market began on January 11. The most recent fake news about Bitcoin is that child pornography has allegedly been discovered in the Bitcoin blockchain, which could lead to a complete ban on operations with the coin.
The blogger acting under the pseudonym of supercrypto1, who posted a large amount of material about the Cartel on Steemit, says that everything that is happening on the crypto market today completely repeats the situation that took place at the beginning of the century on the uranium market, and later on the gold and silver markets, when rates had grown wildly, then active futures trading started, and the asset prices quickly collapsed. "The financial elite admitted that Bitcoin and cryptocurrencies threaten their existence," the author asserts. When money flows into gold, silver, and Bitcoin, it shows that the authorities went bankrupt, and their fiat money is useless. Therefore, it is extremely important for the financial elite to stop the growth of Bitcoin. The work of the Cartel is just to keep the markets of gold, silver, and Bitcoin suppressed."
The author of the blog considers the futures contracts as the main weapon of the Cartel. He notes that the decrease in Bitcoin rates, as before with uranium, began exactly on the day when the futures trade was launched on the Chicago Mercantile Exchange. It is true it was on December 17, 2017, that Bitcoin set a record of value, and, obviously, the decline in its price was directly related to the beginning of trading in futures. After all, the first Bitcoin futures were concluded at a price of about $16,000 a quarter less than the rates of the coin current at the time. Moreover, all subsequent futures transactions were below the current price. The minimum price of the futures was fixed on March 25 at $7,105, while the coin itself traded at $8,560. Since then, futures rates have been gradually growing, and the price recovery of the coin began with a lag of almost a week only from April 1.
The theory of the mysterious Cartel that does not allow the most promising markets to grow, of course, is more fascinating than the usual speculation about "whales" and their strive for monopoly. There is, however, as little practical use in it as in any other conspiracy theory. If you do not know for sure what the manipulators are planning (real or fictional), then their actions are no different from the invisible hand of the market in your eyes. At the same time, market logic and elementary common sense justify themselves.
For example, the collapse of rates after the beginning of trading in futures was predicted by many analysts who proceeded from the assumption that representatives of investment institutions, banks, and investment funds will determine the market value of these assets. At the same time, many of them are sincerely confident that Bitcoin is a market bubble. This confidence is based primarily on traditional methods of analysis. And no matter how enthusiastically the cryptocurrency fans holler that Bitcoin does not lend itself to traditional market analysis, investment funds do not agree with this. Their conviction that something that cost $1,000 just a year ago cannot cost $20,000 is understandable. After the launch of futures trading, crypto skeptics, confident that Bitcoin is nothing but a bubble, simply had to take advantage of the opportunity to prove their case and start a large-scale game on a decline. Precisely what we observed.
Therefore, having decided to invest, do not try to guess what some mysterious "whales" or enigmatic Cartels have planned. You need to analyze the current market and remember that the risks will always be proportional to your potential profit.