Cryptocurrency Market Drops $25 Billion, Bitcoin Below $8,500
Bitcoin has fallen below the $8,500 mark, merely 24 hours after surpassing $9,000. The whole cryptocurrency market has dropped $25 billion, and analysts suspect that the sudden market decline was fueled by FUD (fear, uncertainty, doubt) surrounding Binance.
Earlier this week, Japanese mainstream media outlet Nikkei reported that Binance was warned by the Japanese Financial Services Agency (FSA) for serving local investors on its own platform. Binance, the world's largest cryptocurrency-only market, operates internationally serving millions of customers in different regions. Hence, it is obvious that consumers in Japan could trade on the Binance trading platform, because they may exchange on Upbit, Bittrex, Poloniex, or any other cryptocurrency-only exchanges.
However, Nikkei reported that criminal charges will be filed against Binance if the exchange «fails to stop Japan operations,» and the misrepresentation of the situation led the market to panic. Changpeng Zhao, the CEO in Binance, published a statement to reassure its users and investors that the report of Nikkei was reckless, and that the Binance team was communicating with the FSA for awhile.
We are in constructive dialogs with Japan FSA and haven't got any mandates. It doesn't make sense for JFSA to tell a newspaper before telling us while we have an active dialog going on together," wrote CZ. «No need to worry. Some negative news often turn out to be favorable in the long run. Chinese have a proverb for this. New (often better) opportunities consistently emerge during times of change.»
Almost immediately after the Binance situation was made public, the market dropped $25 billion. But, while the Binance FUD may have led to the decrease of the cryptocurrency market, it also could have been coincidence, since it's not realistic to assert that a market's compliance with a single region led the market to decline by around 10 percent overnight.
Throughout the last few weeks, the cryptocurrency market has demonstrated a similar pattern in that the market has declined 10 to 15 percent, recovered from the correction, and drop again by 5 to 10 percent. It's more likely that whales in the cryptocurrency marketplace are manipulating the purchase price of cryptocurrencies, particularly those with weak amounts, than one exchange in Binance causing the market to collapse.
The Binance situation can also be considered as a positive movement for the organization, provided that this provides opportunity for Binance to operate legitimately, as a regulated financial service provider within Japan, to serve the next largest cryptocurrency exchange market in Japan.
If Binance was the only cause of the current correction, the market should have bounced back immediately after Binance CEO CZ and the company issued statements to clear the FUD. However, the market has stayed in exactly the exact same position over the previous 12 hours and bitcoin still hovering around $8,500.
As bitcoin and other major cryptocurrencies did last week, once volumes begin to pick up on large exchanges, the cryptocurrency market will likely have the ability to recover to its previous level.