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VanEck Director Weighs In On What Pushed Bitcoin Below $8,000 Last Week

Bitcoin (BTC) hasn’t been doing too hot as of late. If you’ve been reading Blockonomi, you likely know that. Last week, we covered the price drop, which pushed the leading cryptocurrency from $8,000 to as low as $6,600 on Sunday.

What we didn’t cover, however, were potential catalysts behind the strong sell-off. The thing is, few knew what pushed Bitcoin lower last week, especially considering that this market’s prospects were starting to look bullish after China’s president endorsed blockchain.

Red Crash Price Crypto

Though, Gabor Gurbacs, a director at VanEck focused on Bitcoin and digital assets, recently weighed in on the price drop. He gave four potential reasonings as to why Bitcoin fell by over 15% in the past seven days. They are as follows.

China’s Crypto Crackdown

While China has backed blockchain, it has asserted since its leader’s endorsement that the backing of blockchain does not equate to the support of cryptocurrencies, especially Bitcoin.

In fact, the People’s Bank of China, Shanghai Branch, recently asserted that ICOs remain “essentially unauthorized illegal public financing, suspected of illegal sale of tokens, illegal issuance of securities and illegal fund-raising.”

As such, the monetary authority said that it will continue to “monitor the virtual currency business activities within the jurisdiction,” which will be “disposed of immediately” if discovered. There have also been reports of key members of the cryptocurrency industry getting arrested and firm locations being raided by police (these reports are up for debate, though the “FUD” exists).

Gurbacs suggested that this new crackdown (or purported crackdown at the very least) has likely scared investors to reenter into the Bitcoin market at lower prices.

Tax Sell-Off

Gurbacs also suggested that investors selling Bitcoin and other cryptocurrencies to satisfy the “year-end tax-loss arbitrage” may have contributed to the collapse in the market.

For those who don’t know what he’s referring to, the VanEck executive is making reference to the fact that investors may be trying to sell their coins at lower prices to report not as large gains for the 2019 fiscal year as they would’ve if, say, Bitcoin was still trading at $14,000.

Startups Selling Crypto

While ICOs are a long-gone fad, companies in the cryptocurrency and blockchain industry continue to predicate their operations off the sale of digital assets. Gurbacs remarked that with there being much product development and many mergers and acquisitions in this industry recently, it would be fair to suggest that companies have been liquidating Bitcoin, Ethereum, and such en-masse.

This isn’t a theory. Blockchain-focused fintech upstart Ripple has a large balance sheet due to the mass sale of hundreds of millions of dollars worth of altcoin XRP, and has been using said balance sheet to make a number of multi-million dollar business deals.

Tied in with this potential catalyst is that Gurbacs’ other proposed catalyst that there is generally lower liquidity in the cryptocurrency markets, which means that selling pressure is more effective than it was during the run-up in June.

Miner Capitulation

One catalyst that Gurbacs didn’t mention was the “miner capitulation” that recently started taking place. Per previous reports from Blockonomi, miner capitulation is when smaller, non-industrial mining operations “get backed into a corner” when the price of Bitcoin falls and their mining machines become technologically obsolete.

This forces these miners to sell the BTC they earned via mining, often all at once, to keep the lights on, cash out, or to upgrade their systems for the future.

This is more than just a theory. ByteTree, a cryptocurrency analytics firm, posted this chart below last week. It illustrates a sale of a $17 million Bitcoin stash coming from a miner wallet.

The post VanEck Director Weighs In On What Pushed Bitcoin Below $8,000 Last Week appeared first on Blockonomi.



Source: VanEck Director Weighs In On What Pushed Bitcoin Below ,000 Last Week

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