Bitcoin Forum

Bitcoin Briefly Drops to $9,000: Factors Behind the Decline

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On March 8, the price of bitcoin dropped to $9,000, after reaching $11,000 merely 48 hours ago. Analysts have attributed three major factors to the decline in the price of bitcoin: Mt. Gox sell off, SEC announcement, penalization of Japanese exchanges.


Mt. Gox Trustee Sell-Off

According to the official document released by the Mt. Gox trustee, a total of $404 million worth of bitcoin and Bitcoin Cash have been sold over the past few months, at a price determined by the trustee, which is significantly lower than the current market value of bitcoin and Bitcoin Cash.

“As a result of the consultation with the court, I considered it necessary and reasonable to sell a certain amount of BTC and BCC at this point and secure a certain amount of money for distribution resources, and thus, I sold the amount of BTC and BCC above. I made efforts to sell BTC and BCC at as high a price as possible in light of the market price of BTC and BCC at the timing of sale. I plan to consult with the court and determine further sale of BTC and BCC,” the document read.

In the next few months, the trustee intends to liquidate the remaining assets, which are 166,344.35827254 bitcoins, worth around $1.7 billion based on the current value of bitcoin.

It is likely that the planned sell-off of over a billion dollars worth of bitcoin has caused a domino effect on many cryptocurrency exchanges, leading to the decline in the value of bitcoin and other cryptocurrencies as a consequence.


SEC’s Announcement

This week, the US Securities and Exchange Commission (SEC) announced that cryptocurrency exchanges that have listed initial coin offerings (ICOs) or tokens on their platforms are required to register with the agency in order to continue providing support for ERC20 tokens.

As CCN reported, Ripple CEO Brad Garlinghouse stated that the market overreacted to the announcement of the SEC, given that cryptocurrency exchanges have simple options to comply with the SEC: de-list ICO tokens or register with the agency.

Garlinghouse added that there exists no uncertainty regarding the announcement of the SEC, as he noted:

In context of yesterday’s SEC statement(s), I hear some in crypto talk about the current ‘regulatory uncertainty.’ What’s uncertain? SEC’s statements have been consistent and clear. ‘Regulatory uncertainty” is just a euphemism for ‘we wish we could ignore SEC regulations.’”

Andreas Antonopoulos, a well-respected cryptocurrency and security expert, emphasized that the SEC and other federal agencies tightening regulations for ICOs was expected. Antonopoulos explained:

“The recent SEC & FinCEN statements are not unexpected. I have been warning people about the potential risks (technical, financial, and legal) of engaging with ICOs for years.”


Japan’s Cryptocurrency Exchange Penalization

As Tokyo-based technology reporter Yuji Nakamura reported, the Japanese government recently penalized four cryptocurrency exchanges and revoked the licenses of two trading platforms for poor security and failing to meet Anti-Money Laundering (AML) and Know Your Customer (KYC) policies.


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Given that Japan still remains as the largest bitcoin exchange market with over 51 percent of the market share, analysts stated that the crackdown on small exchanges have had an impact on the global cryptocurrency market.


Source: https://www.ccn.com/bitcoin-briefly-drops-9000-factors-behind-decline/

Thanks for sharing this. I didn't know about the second and third factor. Although none of the factors causes long term negative impact on bitcoin or crypto trading in general so price will return to 11k when small investors stop selling and bulls start buying

In this situation, the whales will increase their capital in coins. This means that the next time they are even easier and faster to collapse the market. Do you welcome this? The concentration of coins in a limited number of people is a great threat to all small users. But there's nothing we can do about it.

The whales are not a threat for the crypto community.Most of them want to push the prices up and they won`t risk their fortune by creating panic selling.The sad truth is that Japan is the new China and the bitcoin price movement depends  solely on Japans regulatory institutions.Sometimes I wish that all crypto exchange platfroms could just move to some tax heaven country,like the Bahamas.I`m tired of all the "Japan is about to ban crypto" news. 

No matter how we name the factors that "may" have caused Bitcoin's decline the past few days, truth is, there is nothing much in here that we can actually control of. If factors are beyond our control brought about by its nature, then so be it. What we have to do, as those directly affected by the aforementioned factors, is to HOLD our Bitcoins until its value have recovered or until such time we get the return of investment, and in some lucky cases, the latter plus the return ON investment. It is the only thing we can do to contain the situation, otherwise, you will just be accepting the losses every so often while others are profiting at your expense. These are merely paper losses, hence, you never really lost until you decide to withdraw.

It is very obvious those factors mentioned will only have short term impact on the prices of Cryptos bitcoin in particular, recall in 2017 when there was a clamp down on local exchanges by the Chinese government, there was a sharp drop in the price of bitcoin, in the aftermath the price recovered, I belief a similar scenario is also playing out now and definitely the price of btc will recover.

This just goes to show how only a couple of major events and factors can be impactful on rates. Most of you say that this probably won't have any long term effects on btc but what if multiple events/factors like this occur again but at a greater degree in a short span of time.

Btc prices fluctuates so much that even a small negative news can drag the prices down too much and thus in this people do panic selling which is another worst thing that can happen. It does takes time for a rise but once btc pick up the pace we should see in near term btc rising towards 15k soon

Still op missed to confirm the US trading regulations issue as well. After we are seeing the drop why there is too much panic sell in trading sites and fiat exchanges like Localbitcoins.com
I have part of some buy signal expert groups. All of those channel mentioned that this is the best time buy the bitcoin and graph it out in the historical line. Guys don't miss the time and sell the bitcoins as you can.

I agree the influence of the market is still in the power of some individuals or companies which is bad for the crypto ecosystem as they could easily manipulate the market, had it not been the case we should not have had these effects because of an Exchange getting penalized or Securities and Exchange Commission (SEC) ico requirements which should not come by surprise as it was expected of them!

But what i like about our cryptos is they always find their way up, so the decline is good to get new investors into the game.