Analysis News Price Analysis

BTC Briefly Falls until $9,000: Factors Behind the Drop

Yesterday, on March 8, the price of bitcoin falled until $9,000, after reaching $11,000 merely 48 hours ago. Analysts have attributed 3 main factors to the drop in the price of bitcoin: Mt. Gox sell off, SEC announcement, penalization of Japanese exchanges.

Mt. Gox Trustee Sell-Off

In accordance with the official document published by the Mt. Gox trustee, a total of $404 million worth of bitcoin and Bitcoin Cash have been sold over the last few months, at a price determined by the trustee, which is much 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.

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

Probably the planned sell-off of more than a billion dollars worth of bitcoin has caused a domino effect on many cryptocurrency exchanges, leading to the drop in the value of bitcoin and other cryptocurrencies as a result.

SEC’s Announcement

The US Securities and Exchange Commission (SEC) declared this week 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 keep providing backing for ERC20 tokens.

According to some reports, Ripple CEO Brad Garlinghouse stated that the market overreacted to the declaration of the SEC, given that cryptocurrency exchanges have simple functions to comply with the SEC: de-list ICO tokens or register with the agency.

Garlinghouse added that there exists no ambiguity regarding the declaration of the SEC, as he commented:

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.’”

A. Antonopoulos, a respected cryptocurrency and security expert, pointed that the SEC and other federal agencies tightening rules 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 fined 4 cryptocurrency exchanges and voided the licenses of 2 trading platforms for low security and failing to meet Anti-Money Laundering (AML) and Know Your Customer (KYC) policies.

Considering that Japan still remains as the biggest bitcoin exchange market with over 51% of the market share, analysts stated that the crackdown on small exchanges have had an influence on the global cryptocurrency market.