Bitcoin had been on an uptrend since April 12 when it hit a recent low of $6,850. Tom Lee, Head of Research at Fundstrat, had postulated that at least part of the weakness in Bitcoin and other cryptocurrencies in March and the first two weeks of April had been due to investors selling them to raise cash to pay for 2017 gains.
It got as high as $9,950 on Saturday, May 5, but later in the day it started moving lower which seemed to be about the same time that Warren Buffett and Charlie Munger at the Berkshire Hathaway’s shareholder meeting made multiple statements denigrating it. It fell to $9,300 last Sunday and essentially traded between $9,000 to $9,400 until Thursday evening. On Friday it broke down and fell to $8,300.
There is a major cryptocurrency conference in New York City next week and Lee believes that while there could be negative news flow from the conference regarding regulations, the weakness of Bitcoin and other cryptocurrencies since the beginning of the year make them poised for a post-conference rebound.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
[Author’s note: There is no official price for Bitcoin, so I use round numbers.]
Korea and Mt. Gox impacted Bitcoin on Friday
The most recent downdraft seems to have been caused by Korea’s Financial Supervisory Commission visiting Upbit, the country’s largest cryptocurrency exchange. Cointelegraph.com reported from the Korean news outlet Chosun, that the regulators were investigating Upbit for faking balance sheets and deceiving customers.
Upbit was the fourth largest worldwide cryptocurrency exchange by trading volume per coinmarketcap.com. However, per bitcoinity.org the Korean Won accounted for less than 2% of Bitcoin’s total trading volume by currency over the past 30 days, so this by itself shouldn’t have a large impact on Bitcoin.
CCN.com reported that Mt. Gox was positioning to liquidate 8,200 Bitcoins to pay off previous investors. This number of Bitcoins represents about 10% of the cryptocurreny’s past two weeks daily trading volume. If the selling is spread over multiple days it shouldn’t have much of an impact, besides a psychological one.