Bitcoin (BTC) has only just begun recovering from a week of catastrophic losses that saw it fall from $12,000 to $9,500 in one of the biggest drops in months. The coin has posted mild gains in the past few hours but fears of further losses still loom large.
Problems began on August 10th when the Bitcoin price plunged six percent in minutes, falling from $11,860 to $11,250. Minor support kept it trading sideways for a few days but then the real pain arrived. Over the past two days, Bitcoin has lost almost $2,000 in value, dropping from $11,400 to a low of $9,680 earlier today. In the past few hours, a mild recovery has dragged the price back above the significant psychological level of $10,000 but its too soon to say if a trend reversal is occurring.
What caused the massive slump?
News is beginning to surface regarding a possible Chinese Ponzi scheme called PlusToken which may be responsible for the dip. Project organizers allegedly cashed out
almost 228,480 Bitcoin in a single transaction yesterday.
Popular Crypto Twitter voice and founding partner at Primitive Crypto, Dovey Wan (@DoveyWan), has been investigating
the issue. Following a message yesterday revealing the scam, today she tweeted about the depth of the scam and how the project organizers have previously been the subject of arrests.
Now it would appear there is a community-wide call to crypto exchanges to track and cease the sale of Bitcoin, Ethereum (ETH) and EOS assets that are coming from addresses related to the PlusToken project. However, many have pointed out
that immunity against this form of control and censorship is exactly what makes Bitcoin valuable. Crypto analytics firm Chainanalysis is also reportedly looking into the issue in an attempt to track and trace the origin and destination of stolen funds.
Coincidence or just market movements?
Whether or not the drop is a direct result of the PlusToken scam or simply a combination of events is yet to be confirmed. If the PlusToken scam is real we could be in for considerably more losses but looking at general markets around the world, the current crypto market losses are not unprecedented.
Yesterday, the Dow Jones posted
one of its biggest single-day losses in years, dropping 800 points, or 3 percent. The S&P 500 and Nasdaq both suffered similar losses of 2.9 percent and 3 percent respectively. Many see the developments as a sign of an incoming recession as the market features a yield-curve inversion, an event that has previously precipitated several global financial crises.