The bitcoin price has dropped below the $7,300 mark as the valuation of the cryptocurrency market declined by more than $25 billion, from $350 billion to $325 billion over the past 24 hours.
Within the past three days, within merely 72 hours, the valuation of the cryptocurrency market sharply dropped from $390 to $333 billion, losing more than $57 billion. At its previously weekly low, the valuation of the cryptocurrency market dipped to $327 billion. Today, on May 24, the cryptocurrency market fell to a new monthly low.
What is Causing the Market to Drop?
As always, a wide range of factors have contributed to the recent market correction and it is difficult to pinpoint several events as the definitive factors behind the fall of the market. Rather, it as an amalgamation of many events that have occurred throughout the year, which include:
- Mt. Gox sell-off
- Possible manipulation by large-scale traders in the futures market
- Bitfinex taxation policy
- Bithumb and UPbit scandal in South Korea
- Failure of institutional investors to meet the anticipation of the community
- Regulatory uncertainty in several regions
But, it is most likely that the launch of the bitcoin futures market in late 2017 and the manipulation of the cryptocurrency market eventually led the market to become extremely volatile and experience large corrections on a regular basis.
The massive sell-off of bitcoin by the Mt. Gox trustee and a series of negative events from South Korea and the US-led investors to lose confidence in the cryptocurrency market in the short-term.
Earlier today, Bloomberg also reported that the US government and the Justice Department launched an investigation into illicit trading and bitcoin price manipulation.
“The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter,” Matt Robinson from Bloomberg reported.
Due to the abnormal volatility in the cryptocurrency market, it is likely that the US government suspects whales and large-scale investors of manipulating the market to drive larger movements on both the upside and downside.
Where Does Bitcoin go From Here?
Yesterday, CCN reported that the breach of the $8,000 resistance level could send the bitcoin price to the lower end of $7,000. Based on the strong downward trend of bitcoin, it is likely that the dominant cryptocurrency dips below $7,000 and reaches $6,900 before rebounding.
Other cryptocurrencies such as Polymath, Ethos, Storm, Zcash, and Waves, which have recorded large gains throughout April and May, declined by 10 to 20 percent against both bitcoin and the US dollar.
Although the Relative Strength Index (RSI) of bitcoin is signifying a neutral zone, it is unlikely that the bitcoin price rebounds before dropping to the lower end of $7,000.
Ethereum, in particular, has experienced a sharp drop over the past 24 hours, declining by more than 10 percent against the US dollar.