Bitcoin Tumbles 5% as Bakkt Opens Vaults; Kleiman Psychology a Fail?
The Bitcoin price dropped 5% in a rapid thirty minute plunge on Wednesday, sending BTC/USD back to $9,700, and returning the global market cap to levels not seen since May.
Altcoins were characteristically hit hard during the descent, with some recording losses more than twice as bad as Bitcoin.
The tendency towards hope, or ‘hopium’, is strong in the crypto market. Even cautious cynics like myself have been holding out at least some glimmering hope that Bitcoin would surprise everyone, defy the charts, and start a Bakkt-fuelled boom.
With just over a week away until Bakkt officially opens it vaults on September 6th, that prospect looks slimmer by the day. Instead, the market faces the possible threat of sudden massive sell-off of BTC by the estate of Dave Kleiman.
How Real is the Prospect of a Kleiman Sell-Off?
After Craig Wright was ordered to pay Kleiman’s relatives the $5 billion worth of Bitcoin, there has been some suggestion that the inheritance tax required on such a transaction will demand the sale of $2 billion worth of BTC.
Two things make that threat a little less daunting for the time being. Firstly, we haven’t been shown that Craig Wright is capable of producing those kinds of funds, either in Bitcoin, US dollars, or Australian dollars.
Secondly, even if the funds are real, any inheritance tax would likely be calculated as per the value of the assets when Kleiman died. If a bonded courier really does show up in 2020 bearing the private keys to the Bitcoin fortune, it will prove Craig Wright right to an extent, but its value on the price wouldn’t be as catastrophic as some claim.
Anyone looking to cash out several billion dollars worth of Bitcoin would naturally choose to do it in a professional manner. Crashing the market doesn’t help the seller in any way. And there does exist a mob of hungry investors who would be only too happy to take their piece of a surplus $5 billion bag of BTC as it gets sold off over time.
Bitcoin Plunges 5% in Minutes; Altcoins Follow Suit
Regardless of which drama hits the newsstands this week, my funds are all in stablecoins and probably will be for the immediate future.
Note: the current sell-off commenced just as the news broke regarding Bakkt’s fast-forwarded acceptance of deposits on September 6th. I personally expected a major sell-off on the original Bakkt launch date. Could this dip be an example of a pre-dump dump?
From the daily high of $10,269, the value of BTC dropped 5.38% down to $9,716.
A failure to break through the recent double-top formation; the huge decline in trade volume (down 66% since June); and the corruption of the market by wash trading and fake Tether volume. These are some of the main reasons I see the market continuing to drop over the coming months, and possibly right through to next year.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Chart via CoinMarketCap.