Since May 11th more than $40 billion has vanished from the cryptocurrency market cap as leading cryptocurrencies have continued shedding April’s gains for the past 24 hours. At the time of writing bitcoin price dropped to $8,525 and most of the top altcoins have racked up losses of nearly 20%.
What’s all the fuss about?
On the 11th of May, local police kicked down the doors of Upbit (Korea’s largest cryptocurrency exchange) in a raid led by local police and the Korean Financial Intelligence Unit (KIU) which was working in partnership with the Financial Services Commission (FSC). It’s possible that this raid led shocked investors to liquidate their portfolios, leading to a knock on effect on overall cryptocurrency prices worldwide.
At the same time, Mt. Gox trustee Nobuaki Kobayashi violated his promise to not sell anymore bitcoins until next September by selling more than 8,000 bitcoins on various exchanges. Similar to the late 2017 sale, Bitcoin price quickly dropped, losing more than $30 billion from its market value in 1 day. The combination of these two events seem to explain the current shart pullback in cryptocurrency prices.
So Where do we go From Here?
Since mid April all the crypto-friendly talking heads have been extolling the current and future value of the top cryptocurrencies. Tim Draper, Tom Lee, Brian Kelly and a handful of others have continuously shared their optimistic belief that bitcoin will surpass $25,000 before the close of 2018 and a few have even suggested bitcoin might reach $64,000 or even $250,000 in the next few years. Even though cryptocurrency valuations are currently down nearly 20% the general consensus seems to agree that prices will recover in the short term and that the current pullback was primarily caused by the Upbit raid and Mt. Gox wallet liquidation.