CTFC's (Commodities and Futures Trading Commission) charges against BitMEX for facilitating money laundering coupled with the operation of illegal derivatives exchange has sparked a lot of friction. The past few hours have noted plummeting Bitcoin prices as this accusation was pushed in the way of BitMEX. This has been a cause of worry for investors and traders as dipping Bitcoin prices is the last thing they wish for. So, here are a few reasons why the ongoing action will not result in the much-feared Bitcoin price crash.
The arrest of Samuel Reed, the co-founder of BitMEX was the cherry on the shocking cake and inspired a lot more buzz.
Having secured its place as the most popular Bitcoin futures exchange for the past few years, BitMEX is now beginning to see the other side of the spectrum. With competitors like ByBit and Binance Futures flocking the horizon and increasing their market share, a lot is happening in the world of cryptocurrency.
The charges against BitMEX were certainly predictable deep down. However, it is Reed's arrest that seems to have inspired a lot more startle. Right after the news hit the media, the price of Bitcoin went down from $10,883 to $10,437. This was a sharp 4.11% drop. There are myriad factors that could help Bitcoin recover from its current state within a short period. Learn more about the CTFC
Bitcoin's rapid downward slope
With the price of Bitcoin witnessing a sharp decline of more than 4% in two hours, we have come to face a kind of volatility we haven't seen with Bitcoin frequently. Such intensive falls of Bitcoin comes with a slope full of liquidations. With several trades being highly leveraged in the futures market, the result is a loop that holds long contract liquidations. This further leads to a larger fall. Visit bitcoin code to learn more about the bitcoin’s rapid downward slope.
This time we have noticed an open interest and volume hitting a significant low in the futures market. Over leveraged trades in the market that are active and open are very few thereby reducing the chances of any massive correction.
Are regulation-induced downturns symbols for recovery?
Well, history certainly seems to emphasize this idea. In the last few years, the crypto market has seen a variety of regulatory actions imposed by several authoritative or government bodies across the world. However, Vijay Boyapati, a bitcoin researcher, believes in the "bouncing back" power that bitcoin carries.
This is not to say that the charge against BitMEX will not show any consequences. Instead, it merely suggests that recovery is extremely likely.
The researcher said:
"Bitcoin market reacting negatively to severe exchange issues or confiscations isn't a new phenomenon. Over the last many years, this has only created a greater buying opportunity. Action against BitMEX presents an exactly similar picture."
Key defense area settled at $10,500
Throughout August and September, this level has sustained itself as a strong and believable one. Bitcoin has certainly stooped below it at times, but it has shown nothing other than a quick rise after such an incident. Traders in the industry are certain that the price of Bitcoin will demonstrate a rise in the future. They believe that this short term trend that the cryptocurrency is witnessing is neutral when it comes to the medium term.
Cantering Clark, a well-known trader, wrote:
"Two-way trade opportunities is something we could soon look at when talking about the near term. However, things will be better in a week or two from now. Such a space has always inspired less attention and more reaction."
Another trader Michael van de Poppe reflected the same Ideology. The price of Bitcoin continues to thrive within the symmetrical triangle sticking to the $10,500 level. If a trader focuses on resistance or support levels, this certainly is an important price to be on the lookout for.
The price breaking below this level would mean traders still expecting the $10,000-$9,800 range to stay as support while buyers continued to purchase dips to this level throughout September.
