- A lot has changed since the 2017 price boom, and the last halving, which occurred on July 9, 2016.
- The recent March 12 BTC market crush was a testament to the susceptibility of the bitcoin market to manipulation.
- The most recent drop led to manipulation accusations.
A lot of crypto pundits have predicted a massive bitcoin price hike, especially following the BTC halving episode, which is set to occur in May. It will cause a 50 percent reduction in mining rewards, leading to a scarcity of the coins. Increased demand due to subsequent scarcity is expected to follow.
But this is just in theory. In reality, a lot has changed since the 2017 price boom, and the last halving, which occurred on July 9, 2016. The sector is much more decentralized, there are more crypto investment instruments such as CFDs, which eliminate the need to handle actual crypto, and there is greater regulation.
Upward Trajectory was Easier to Manipulate in 2017
Just before the 2017 BTC price jump, extensive price market manipulation to create an artificial price escalation was easier to execute. Only a handful of crypto exchanges existed, and bitcoin was largely popular among people who truly cared about anonymity, plus a few tech enthusiasts.
There were also fewer bitcoin whales, which meant that they had greater control of the markets. A forensic study published in 2018 by professors John Griffin and Amin Shams from the University of Texas supports this position. It revealed that a single player was involved in the 2017 price manipulation scheme that led to a $19,500 price peak.
What followed was a flurry of investigations and lawsuits. A collective of crypto companies was accused of manipulative practices. Such malicious strategies are now easier to detect and are frowned upon.
As major economic powers, such as China and the United States, scrambled to regulate the market in the wake of the boon, adoption in these jurisdictions became even more difficult. Initial Coin Offerings (ICOs) and crypto trading are currently banned in China. In the United States, taxes have to be declared on crypto trade earnings regardless of losses due to price dips. Exchanges are obligated to avail this information to the authorities upon request.
The European Union is also looking to enact such regulations. These moves have led to a slowdown in the bitcoin user base. The core BTC privacy-loving group is slowly being edged out, leading to lower demand for the digital currency.
It is Now Easier to Tank the BTC Market than in 2016 or 2017
The recent March 12 BTC market crush was a testament to the susceptibility of the bitcoin market to manipulation. The slump shaved 37 percent off bitcoin’s value in just 24 hours. Prices cascaded from $6,193 to $3,864 within a day.
A quick V-shaped reversal saw prices reach $5,637 on March 13. Since then, the coin has established a first resistance point at around $ 7,470 and the second at approximately $7,7100.
What Caused the March 12 Drop? Manipulation at Play
The influx of institutional money since the 2017 price boom, as well as the introduction of bitcoin futures for retail investors, has meant an influx of overleveraged positions on major crypto exchanges. This means there are lower lows due to mass liquidations once a sizeable price drop occurs.
The most recent drop led to manipulation accusations. A crypto exchange was blamed for triggering massive liquidations after its liquidation engine allegedly caused aggressive selloffs. The platform went offline for 25 minutes during the slide. This prevented more liquidations on the system and allowed markets to recover.