Is Bakkt to Blame or is Facebook's Libra?
Bitcoin and cryptocurrencies in general are known to be volatile assets. Cryptocurrencies and Bitcoin have amazing gains and devastating losses at times. It can be more difficult to explain gains and losses with cryptocurrencies than traditional stocks and currencies.
Earlier today, Bitcoin and most other cryptocurrencies had a surprising crash. Bitcoin managed to lose more than $500 of its value in less than 3 hours. It is currently trading at $7,400.
Most other cryptocurrencies are following Bitcoin's lead and are reporting losses around 7%.
Is Facebook's Libra or Bakkt to Blame for Bitcoin's Crash?
An important event is currently unfolding in Capitol Hill. Facebook CEO, Mark Zuckerberg is testifying in Congress regarding their new cryptocurrency project, Libra. Zuckerberg is currently speaking under oath with the House Financial Services Committee.
Libra has long been considered controversial by many in the cryptocurrency space and among regulators. It's regulatory woes have been documented here and by other publications.
The Libra Association lost several important members over the past week or two, including Visa, Mastercard and Paypal.
The current crash may have been caused whales speculating that the Libra hearing will not go as it should.
Another possible culprit for the current crash might be the institutional Bitcoin Futures provider Bakkt. We have long speculated that Bakkt is inherently linked to Bitcoin's price. While many have anticipated that Bakkt would help Bitcoin grow, it might have had the opposite effect.
While Bitcoin's price and Bakkt might correlate, there is a surprisingly high trading volume there, roughly six times higher than average. The last time Bitcoin Future's volume rose to high levels, Bitcoin's price rose.
The crash might be a mix of both. Perhaps anticipation of the Libra hearings affected Bakkt's Bitcoin Futures, which in turn have lowered Bitcoin's price.
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Written by Jonathan Ganor
Writer & cryptocurrency aficionado