Cryptocurrency markets take a dive, earn perfect score
Bitcoin earned a perfect score, but the altcoin divers had points deducted for screaming on the way down.
One of the key metrics on which professional divers are judged is their entry into the water. And the finest entries are always achieved by diving directly downwards like a needle.
Bitcoin is apparently an experienced diver, and its precipitous plunges over the last 24 hours have left analysts everywhere holding up big signs with the number 10 on them.
The perfect score was awarded due to the speed and verticality of each flash crash. Time has softened the above curves somewhat, but the bulk of each of those downturns happened in just minutes.
The altcoin markets took an even deeper dive across the board, but judges deducted points due to them screaming on the way down. The total crypto market cap paints an impressive picture.
What just happened?
As is usual for times like these, traders come together and ask themselves how such a tragedy could happen, sensitively broaching the subject through a series of hot takes.
Theories of the day include:
- Goldman Sachs delaying its plans for a crypto trading desk.
- ShapeShift announcing its intention to start collecting user IDs via a membership scheme.
- Something something bitcoin ETFs.
- Manipulation and insider trading, starting with a strange 10,000BTC short a couple of days ago.
- The ongoing arrival of almost a billion dollars worth of old Silk Road bitcoin to exchanges.
- Trading bot signals being blocked by tinfoil hats.
Market movements don't always have to have a reason, but the distinctive nature of the plunge here suggests that it's not just happenstance and that something actually went down.
The most solid explanation is probably the ShapeShift announcement, signifying in a way that cryptocurrency will find it extremely hard to step beyond the confines of the existing financial systems. People who were using ShapeShift for exactly that reason might have every reason to be spooked, and to start looking for a way to show their digital assets to the door.
The bulk of the trading lately is also crypto to fiat which suggests that people are looking for a way to head out.
There were also some anomalies which may or may not be relevant. It's reasonable to assume, for example, that The Rock didn't handle US$9.3 trillion in the last 24 hours.
It may also be worth highlighting the current state of Tether in the marketplace. It saw an especially monumental rise in demand as bitcoin plunged, trading as high as $1.03 for brief periods, which is a real rarity. But its volume wasn't especially significant next to the massive amounts being moved on the wider cryptocurrency markets.
The circulating supply of Tether dropped significantly, but not unduly, on September 4 which might also have played a part if you subscribe to the theory of Tether circulation and bitcoin prices.
Another decent area to examine might be coins which didn't move the same way as the rest of the markets during the plunge. Finding any stand-outs there might help highlight the reason for the drop and why people are selling so much suddenly.
But that trail leads to... Dogecoin. Its rise against BTC could probably be attributed largely to bitcoin's plunge, but the thing was also rising against the US dollar even as the rest of the markets were dropping.
What does that mean? Probably that somewhere at least one serious trader is literally investing millions of dollars in memes as a store of value. The future is here, and it's utterly spectacular.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA