Whereas crypto markets are known for volatility, Bitcoin has not experienced price swings on the present scale since 2014. Although the current global turmoil no-doubt plays a role, investors increasingly believe market manipulation is also to blame.
Forty percent of respondents in a Bitcoinist poll are convinced that whales are behind Bitcoin’s current peaks and valleys:
Is this #BTC pump real or ‘whale-manipulated’?
— Bitcoinist.com (@bitcoinist) March 20, 2020
Crypto investors have long accused large holders of actively manipulating the price through strategic trades. The extent to which this assertion is true may be debatable, but there is no lack of circumstantial evidence. For example, large sell-offs on BitMEX played a key role in a quick price drop two weeks ago.
Also, Bitcoin pumped eight percent on Monday after Tether moved USD $40 worth of USDT onto Bitfinex just as the market was crashing. It is hard to believe that Tether did not strategically time this transfer to take advantage of the situation.
Regardless of who is behind this volatility, there is no question that it is growing. The Bitcoin Volatility Index has spent several days over ten percent. It last saw this level in 2014, when the market was far less developed and most major exchanges had not even launched.
Public Sentiment Impact Investment
Investors with cash to spare understand that now is a good time to buy Bitcoin at a discount. Nevertheless, many will be reluctant to do so if they do not trust the market. Given the present state of the global economy, Bitcoin has an opportunity to prove itself as a safe haven for wealth. The present volatility thus undermines one of its key strengths.
Some speculators may seek to exploit this volatility, as properly timed trades under these circumstances can be incredibly profitable. It is worth noting, however, that there has never been a better time to experience a huge loss. For example, BitMEX liquidations are at an all-time high as margin traders have been rekt en masse when prices rapidly rise and fall.
For smart investors, the data makes a strong argument to buy and HODL. Bitcoin has proven to be most profitable for those that employ a conservative strategy of gradual accumulation. Doing so will also bring more stability to the market, as potential manipulators will have less quick liquidity to play games with.
It is well known that as more investment moves into the crypto space, manipulation will become more difficult, and prices will become more consistent. Now maybe the best time for the crypto community to move more firmly in that direction.
What do you think about the latest Bitcoin volatility? Share your thoughts in the comments below.