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It was only after continuous selling pressure suppressed the price of Bitcoin, Ethereum, and a few other major altcoins that people realized a couple of major Ponzi schemes from 2019 might be unloading their bags into the market. Chainalysis believes that this excess supply in the market is the main reason that BTC and others have been on a downtrend ever since going nearly 4x from January to June of this year, reported by Bloomberg, December 16, 2019.
Orderbooks Tell All, Except When They Don’t
Cryptocurrency prices have been on a rollercoaster this year, bursting with positive sentiment in the first half of the year whilst the second half saw prices depress with that newfound positivity dwindling away. Usually, an experienced trader will be able to tell if a buy/sell wall on an orderbook is legitimate activity or just market makers doing their thing. Of late, it seems like the legitimate buy walls have dried up as more and more people offload their holdings.
At the very core of this situation sits multiple fraudsters who conned people out of their cryptocurrency to enrich themselves. PlusToken is one of the larger schemes, having scammed nearly $3 billion worth of crypto from people over a relatively short time frame.
Chainalysis has reason to believe that OTC players are helping facilitate these transactions, going an extra step of laundering these funds through exchanges like Huobi that aren’t bothered if funds deposited on their platform are ill-gotten.
The Economics of Bitcoin
Important events like the block reward halving are widely discussed as the catalyst for a potential explosion in Bitcoin’s price. What people fail to consider is that external factors are just as important as internal factors. Block reward halvings, difficulty adjustments, and increasing hash power are a few examples of internal factors that help shape a thesis for Bitcoin.
Ponzi schemes unloading their bags, demand not being able to absorb excess capacity, and regulatory concerns are some external factors that shape bitcoin price just as much as native network aspects do.
To summarize, PlusToken unwinding – OTC or open market – has a major impact on BTC price and certainly explains why the price has been so depressed since June. Hope remains alight due to the fact that these schemes have a limited amount of BTC, yet demand is constant.