Earlier today, the cryptocurrency market took a sharp downturn despite the recent positive sentiment around the market. This downturn saw bitcoin lose 12% in the last 24 hours and was trading at $6,422 as of 1:25 p.m. in Hong Kong, according to Bloomberg. The sudden cryptocurrency market slump may be as a result of the announcement by Goldman Sachs made earlier today.
Bitcoin, together with other digital currencies dropped by 10% and more. For instance, Ethereum’s price had fallen 19.72% in just a few hours, while Ripple XRP saw its value drop by 13.92%. Cryptocurrencies often move in tandem, pulled by the fortunes of bitcoin-which far exceeds its peers in terms of market cap. In spite of recovery from its earlier lows above $7,000, the coin’s price dropped 12% according to Coinmarketcap.
The main reason behind the current cryptocurrency market slump is an announcement by Goldman Sachs that they would sideline plans to open its cryptocurrency trading desk. Many comments around this news were regarding potential insider trading and the fact that institutional buyers would like to get into the crypto space at lower levels thus manipulating the market. This are the only reasons that make some sense, since most analysts have questioned the possibility of someone taking a $74,000,000 short position so quickly. Also, ShapeShift AG stated on Tuesday that they would begin to ask for user’ personal information. This policy may drive away customers who value anonymity.
Additionally, research was done by the RoninAI team, an AI-based crypto signals platform, into the current situation to see any red flags. The results revealed some unusual behavior just before the cryptocurrency market slump. One of these behaviors is the negative sentiment surrounding the market that increased tremendously right before the actual drop.
What do you think mainly caused the sudden drop? Will the market recover from this? And how long do you think it will take to recover?
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