Brian Kelly: Bitcoin Price Decline Will be a Short-Term Event

For the first time in three months, Bitcoin initiated its first major move. Unfortunately, for investors in the crypto market, BTC plunged by more than 11 percent, engaging in one of the most intense sell-offs in a 24-hour period in all of 2018.

Bitcoin Price Tumbles

BTC/USD | Coinbase

On CNBC Fast Money, BKCM founder and CEO Brian Kelly stated that the recent drop of BTC and the rest of the crypto market could be mainly attributed to the civil war of Bitcoin Cash (BCH), wherein two camps, one led by Craig Steven Wright, CoinGeek, and Calvin Ayre, and the other led by ABC, Bitmain, ViaBTC, and Jihan Wu, are competing against one another to operate a chain of BCH that secures consensus in the community.

“After some real quiet period, lowest volatility, almost in Bitcoin history, all of a sudden today things exploded, so what happened? Bitcoin Cash, which forked off of Bitcoin last year, is doing a hard fork. Now, when you do a hard fork, everybody usually agrees. But in this particular case, everybody is not agreeing. So we’ve got ourselves a crypto civil war, and that has people in the market concerned,” Kelly said.

Why is Bitcoin Cash Affecting the Rest of the Market?

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The problem with the BCH civil war is that it has started to have an impact on the rest of the market. Calvin Ayre’s camp, called Bitcoin SV, turned it into a hash power competition, threatening to engage a 51 percent attack against the Bitcoin Cash network, which when carried out, gives Ayre and his camp the ability to manipulate BCH blocks.

Bitmain and Jihan Wu have a significant influence over the Chinese cryptocurrency mining community. As the largest mining equipment manufacturer and mining pool operator, Bitmain could also switch its hash power from BTC to BCH to fight against CoinGeek and Calvin Ayre.

If that is to happen, then the hash rate of BTC will decline in the short-term, which could potentially lead to difficulties in mining blocks at a fast rate, slowing down the network.

Conclusively, if the hash rate war between CoinGeek and Bitcoin Cash continues, then it will have a negative impact on both Bitcoin and Bitcoin Cash. As the most dominant cryptocurrency in the market, any negative sentiment surrounding BTC will inevitably pose an effect on the rest of the market.

“People are concerned that both Bitcoin and Bitcoin Cash markets, their networks might slow down, they might not work as well, the software upgrade may not go through or if it does go through, we will end up with some chaos. People started selling, that triggered stops, everybody got concerned. The entire market settled down. In my view, a very short-term event,” explained Kelly, adding that his fund invested during the downtrend.

The Event Maybe Short-Term, But Hash Power War Isn’t

If the hash power conflict between CoinGeek and BCH caused the drop, then it is possible that it continues to affect the crypto market in the weeks to come.

Due to the intensity of the sell-off in the market, while a corrective rally is always a possibility, it is more likely for the crypto market to remain in the low region of $180 billion in the short-term.

Author: Joseph Young
Image Credit: Charts from TradingView.

Bitcoin May Fall To $2,500 Before It Rebounds

The price of Bitcoin continues to take a tumble. The number one cryptocurrency according to market capitalization continues to experience a tumultuous 2018. One expert even predicts that BTC may bottom out at $2,500 as the crypto market continues to struggle.

Bitcoin Hovers Above $6,000

More than a week ago, BTC dropped $1,000 (from $7,700 to $6,700) in the space of a few hours as a wave of selloffs hit the market. The period coincided with the Coinrail hack as well as the U.S. government demand for information from top exchange platforms on suspicion of price manipulation.

In the past few days, BTC has experienced some degree of recovery, but all that was wiped away on June 21 as prices fell below $6,500. At the time of writing this article, Bitcoin is trading slightly above the $6,100 with a seven percent decline in the last 24 hours.

Signs of Bottoming as Bitcoin Selling Becomes Exhausted

In a recent CNBC article, Bill Baruch, the President of Blue Line Futures said that Bitcoin is approaching its bottom level. According to him, there are signs that the volatility of the market is “depressed.” Baruch also revealed that the BTC sales market has become supersaturated.

Fears of two back-to-back cryptocurrency exchange hacks may have pushed retail investors over the edge. The market is to stranger to panic selling at the slightest hint of a crisis. Conversely, Janine Wolf of Bloomberg declared recently that there is no end in sight for the current downtrend, saying:

According to the Directional Movement Index, bitcoin is on its strongest negative trend since the sell-off earlier this year. The index’s ADX line is currently at 39.3. Anything above 25 is considered a strong trend. Meanwhile, the index’s DVAN trend line, a divergence analysis that measures buying or selling pressure, is also giving off ominous signals.

Bitcoin Can Fall to $2,500 and Still Rebound to $14,000

No matter the extent to which BTC falls, experts like Luis Carranza, the founder of London Fintech Week believes Bitcoin will bounce back, saying:

Crypto is unpredictable. There are massive spikes and drops. $4500 could be the bottom, but nothing is preventing $2500 from being the bottom.

Bitcoin optimists point to the emergence of regulatory clarity and the influx of institutional investments as reasons why BTC will recover. Commenting on the role of clear regulations in the market, Gavin Pannu of the London Academy of Trading said:

Central Bankers have been quiet during the cryptocurrency bull-run and have been doing their due diligence with research and white papers carried out by regulators and experts in the field, and the market is anticipating an optimistic view from Central Banks. Regulating cryptocurrency would ease investors’ concerns.

On the subject of institutional money coming into the market, experts like Matthew Newton of eToro believe it breathes new life into the industry. According to Newton, the presence of large investors in the market is an “important development” in the crypto world. Notable names like Goldman Sachs and Nasdaq have made significant inroads into cryptocurrency in recent months. However, Newton believes that the proper regulations will make big money flow into the market, saying:

For institutions to fully commit, they’ll need more structured products and some sort of regulatory oversight. Reputational risk is a big issue for them, as is overcoming the media skepticism. Once an appropriate regulatory framework is in place, big-ticket money is likely to follow suit swiftly.

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Author: Osato Avan-Nomayo
Image Credit CoinMarketCap