Bitcoin (BTC) shockingly lost $2000 in 24 hours ahead of Tuesday’s Halving event that will see the number of BTCs awarded to miners cut in half.
The opposite was supposed to happen, and we will explain the flash crash in a minute.
But Facebook’s Libra project, the famed stablecoin that was supposed to be launched in the first half of this year, is back making headlines in the form of a major appointment and structural changes to its offering.
A Crypto Tumble
The CoinTelegraph reported that Bitcoin (BTC) price dropped from $10,000 to $8,100 within just over a day, plunging by 9% in a single hour. It liquidated $200 million worth of longs, obliterating the futures market.
Why? Three key reasons:
1- Strong multi-year resistance area above $10,000
Since mid-2018, the $10,200 to $10,500 range served as a historically strong area of resistance for the top-ranking cryptocurrency by market capitalization. The only time it budged and reached $14k in June 2019, Bitcoin failed to do that again.
2- Whales shorting the market
Betting the low price market is a bear strategy that certain BTC whales resort to and there is money to be made on low crypto prices. Whales started to sell at $9,900, and led to a cascade of long contract liquidations primarily on BitMEX and Binance Futures. The point of rejection was just over $10k BTC.
Whales started to fiercely short Bitcoin across major cryptocurrency exchanges.
3- Natural selloff
Ahead of the Bitcoin block reward halving set to occur on May 12, trading activity on all major cryptocurrency platforms surged significantly.
CME saw record-high open interest, Deribit recorded all-time high volume for its options contracts, and spot exchanges demonstrated 2017-esque volume in the last three weeks.
When many new investors enter the market in anticipation of a major event, it opens the market up for a steep selloff.
Bitcoin’s hashrate hit its all-time high ahead of the Bitcoin halving, meaning that miners are working harder than ever; and Bitcoin’s market cap surpassed $170 billion, suggesting that the market is bristling with activity ahead of the halving.
America accounts for just 7.24% of the global hash power total.
At 6.9%, Russia comes in third followed by Kazakhstan with 6.17%, Malaysia with 4.33%, and Iran with 3.82%. The rest of the world make up 6% of the hash rate.
According to the Block, Facebook’s Libra stablecoin project will see a host of single-currency stablecoins developed alongside a multi-currency one, and could serve as a platform for central bank digital currencies..
“We are therefore augmenting the Libra network by including single currency stablecoins in addition to ≋LBR, initially starting with some of the currencies in the proposed ≋LBR basket (e.g., LibraUSD or ≋USD, LibraEUR or ≋EUR, LibraGBP or ≋GBP, LibraSGD or ≋SGD),” the Libra whitepaper states.
This move addresses many of the concerns that delayed the launch of Libra to start with.
Also, Stuart Levey, who vacated his current post as Chief Legal Officer for HSBC, has been named chief executive officer of the Libra Association.
Levey will oversee the launch of Libra, which is slated for the second half of 2020.
Libra has faced immense scrutiny from regulators and private companies, who are worried that Facebook and a group of private companies are trying to become the world’s central bank.
The Libra coin’s value is pegged to a basket of fiat currencies, the ratio of which the Libra Association controls. That removes power from central banks, which work in the public interest.
Of the 28 companies that planned to join the Association when it was announced in July 2019, eight have since dropped out, among them eBay, Visa and Mastercard.
Compared to Libra’s complicated basket of fiat-backed, multiple-stablecoins design, the Digital Currency Electronic Payment (DCEP), China’s National digital currency AKA e-Yuan, is simply digital cash. It aims to get rid of paper and coin-based cash, while providing traceability and a good user experience. China aims to beat Libra’s launch with its own cryptocurrency.