Note: To maintain consistency with quoted reports, Bitcoin Cash’s old ticker BCC is used in this article
Attorney and bankruptcy trustee for failed Mt. Gox exchange recently revealed his massive selling positions of Bitcoin and Bitcoin Cash on the open market, which plunged cryptocurrency prices.
Based out of Tokyo, Nobuaki Kobayashi, is responsible for handling the funds acquired from Mt. Gox on behalf of claimants. On March 7, a report was released showing that he exchanged around 35,841.00701 BTC and 34,008.00701 BCC for 42,988,044,343 JPY (~$405 Million USD). He argued that he “made efforts to sell BTC and BCC at as high a price as possible” since he “considered it necessary and reasonable to sell.” Many complained on reddit that he was the cause for the huge plunge in crypto prices over the past week. Redditors also complained about why the trustee had to exchange the BTC and BCC for JPY not just give claimants their BTC and BCC.
Further, it was soon revealed that Kraken suggested that the trustee conduct the sale in Kraken’s dark pools or over-the-counter arrangements to prevent a market plunge, but was not taken up on the offer. Nevertheless, the report also details that the trustee had begun selling the BTC and BCC since last September and still has around $1.9 Billion USD between BTC and BCC to offload.
News of selling, as well as SEC registration demand news, potentially to blame for the price plunge
The fact that the open market selling has been going on for a few months even when prices were increasing indicates that the recent price drop cannot be wholly due to the trustee’s actions. The price drop could be partially blamed on the trustee for selling so much BTC and BCC on the open market, but it is also partially due to a decline of buyers. Since reports have withdrawals starting in September 2017, the lack of significantly unprovoked price decreases for that time revels that there had been buyers, but less buyers now, to make a market at reasonably high prices. The news release of the trustee’s actions can also partially be blamed for changing crypto traders’ expectations of future market conditions due to the excessive reserve of BTC and BCC that still needs to be cashed out.
There are still many headlines blaming the price drop on SEC demands that crypto exchanges be registered with the SEC. Another headline blames the Binance hack for the price decline. While it is easy to name correlations and much harder to name causations, it can be said that cryptocurrencies and their prices have weathered many similar governmental calls for regulations along with hacks over the past few months. The Mt. Gox trustee liquidation case, however, is much more uncommon. Prices are prone to shocks by unexpected news, but only relatively, which the cryptocurrency market is still discovering what is and is not normal price movements and unexpected news.
Price fluctuations may stabilize with heavy use as currency
Markets settle on prices based on vasts amounts of information, but the greater the confidence in an item, the more stable the price will become when faced with unexpected news. Stability can be achieved through many ways, but one way cryptocurrency achieves stability is by demonstrating clear use cases that maintain buyers and users of the cryptocurrency. Dash does precisely this, right now, by providing a plethora of ways to earn, buy, and spend Dash in everyday life.
Many can choose to be paid in Dash by combining Uphold and Bitwage and then they can take those Dash and buy goods on Amazon via Bitcart. Dash is being exchanged for goods and services in countries all around the world including Venezuela, Ghana, Nigeria, South Africa, Zimbabwe, Morocco, Cameroon, the UK, Southeast Asia, the US, and plus many more. High price volatility is a natural occurrence for new technologies and relatively low volume items, but prices eventually stabilize as the underlying asset use cases become more clear and adoption increases. Dash is one of the best positioned cryptocurrencies to demonstrate its use cases with super fast transaction speeds, low fees, and excellent development and structural framework. Dash grants people the ability to live off of it right now, which supports a base price that is less prone to fluctuations. As people continue to adopt and use Dash, breaking news stories will have less of an affect on the core price of Dash.