The cryptocurrency market is in the midst of a selling frenzy, with Bitcoin, Ethereum and most altcoins experiencing a sharp and sudden drop in value. A major sell-off, which began at 4:40 p.m. UTC +7:00 on Wednesday saw total cryptocurrency market capitalization lose almost $12 billion in just one hour.
While the crypto community may be quick to reference circumstantial evidence that Goldman Sachs may be terminating plans to launch a cryptocurrency trading desk, the current sell-off is closely linked to the movement of over 111,000 BTC from wallets associated with purported Silk Road operator Ross “Dread Pirate Roberts” Ulbricht.
Bitcoin, currently ranked #1 by market cap, is down 12.2% over the past 24 hours. BTC has a market cap of $111.4B with a 24 hour volume of $6.84B.
Chart by CryptoCompare
Market Cap Drops by $12 Billion in Minutes
Bitcoin, which recently exhibited strong bullish indicators, abruptly lost over $400 in value, dropping below the $7,000 level. Over 50 percent BTC volume traded within the last 24 hours has been on BitMEX and BitForex. Notably, BitMEX trade activity is linked to the recent mysterious distribution of $1 billion in Bitcoin from a wallet associated with defunct black market platform Silk Road, signaling a potential market dump orchestrated by the party that controls the wallets
Cryptocurrency traders and investors have been quick to blame recent CNBC coverage that announced the termination of Goldman Sachs’ plans to launch a crypto trading desk. While the Wall Street giant may be placing crypto trading desk plans on hold, the evidence is by no means conclusive. CNBC’s coverage also cites a recent Business Insider story on the matter, which, in turn, references no sources other than “people familiar with the matter.”
The cryptocurrency market is highly reactive to negative press, colloquially referred to as “FUD,” but a significant drop in value, such as the dump currently underway, has historically been associated with the actions of whales within liquidating large amounts of Bitcoin. Rumors of a potential 16,000 BTC dump associated with the Mt. Gox scandal earlier this year catalyzed a $1,500 drop in Bitcoin prices, shaving billions off the total cryptocurrency market cap.
The recent movement of over 111,000 BTC from wallets associated with the Silk Road platform indicates that the current sell-off may be caused by a large amount of washed Bitcoin hitting exchanges.
Community-driven investigative efforts have also revealed that at least 3,000 BTC from the Silk Road hoard have been transferred directly to Binance. Bitcoin movement from Silk Road-related wallets coincides with a recent price increase in Monero, which surged 10 percent directly after Silk Road funds hit Binance.
The manner in which Silk Road-related BTC is currently being placed within the market implies that the party responsible is actively in the process of mixing, hiding and selling the Silk Road holdings.
Ethereum, currently ranked #2 by market cap, is down 18.48% over the past 24 hours. ETH has a market cap of $23.34B with a 24 hour volume of $2.84B.
Chart by CryptoCompare
Ethereum Decimated by Rapid Sell-Off
Ethereum has suffered a significant blow in this latest sell-off, falling 10 percent from a week-long stable point near $280 to $250, a low not seen since a mid-August drop related to negative investor sentiment driven by Bitcoin ETF delays.
Ethereum has recently been the subject of criticism, with co-founder Vitalik Buterin defending an analysis of the Ethereum network, which stated that ETH values are likely to drop to zero in the near future.
The global cryptocurrency market cap stands at $203.53B with a 24 hour volume of $20.65B. The Coinbase Index is currently sitting at 2462.62. Bitcoin dominance is currently at 54.71%.
CNBC Contraindicator Strikes Again
The sudden drop in cryptocurrency market value may be loosely associated with skittish investor sentiment and the possibility of a large-scale Bitcoin dump caused by unleashed Silk Road billions, but recent market action has reinforced CNBC’s Fast Money as a reliable contraindicator.
Earlier in the day, CNBC’s Fast Money tweeted bullish statements on Bitcoin, predicting a Bitcoin rally to one-month highs. Subsequent to CNBC’s Fast Money, total crypto volume shrunk 5.5 percent in one hour.
Ultimately, the cryptocurrency market may respond strongly to negative press, but a single sourceless article related to Wall Street players is far less likely to catalyze a dramatic drop than the active sale of almost $1 billion in Bitcoin across multiple exchanges.
Cover Photo by Osman Rana on Unsplash
Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.
Did you like this article? Join us.
Get blockchain news and crypto insights.