Cryptocurrency market crash; speculations suspect market manipulation
A new round of speculations surfaces as RoninAi, an AI-based software company for cryptocurrency trading, published fresh data which pinpoints market manipulation as one of the suspected reasons for the unexpected crypto price drop. The crypto market plunge that happened on Wednesday has caused the spread of many speculations, however, an AI-powered speculation should hold more value. Also, the speculation lies along the lines of market manipulation which makes it even more interesting.
A steep dip in the market was noticed on Wednesday after the financial giant, Goldman Sachs repealed its plan to open a cryptocurrency trading desk. The overall crypto market plunged and the total market cap fell by $ 12 billion. According to a report, the crypto market saw someone take a 10,000 BTC short position valued at $74 million. A few days after he/she began the shorting a bear storm hit the crypto market. Some speculations suggest that Goldman Sachs was behind the taking the Bitcoin short and then waited two days to declare that they would be canceling plans for a new crypto trading desk. Comments around this news revolved around institutional investors looking to buy into cryptocurrency markets at low prices leading to market manipulation.
The Alleged Market Manipulation
While these are just hunches about why the market dipped, RoninAi furnishes data which proves a ‘deliberate market manipulation’.
— Ronin Ai (@roninaipro) September 5, 2018
RoninAi analyzed technical indicators to make sense of the price drop and found unusual behavior just before the crypto crash. Among one of the indicators was the social sentiment indicator which ‘sporadically increased’ just before the market crash.
According to the charts, social sentiment rose above the three standard deviations from its mean levels during the few hours preceding the price dip. Wednesday morning saw a break above 3 standard deviations that happened just 10 to 15 minutes before the crash. the Past data suggests that an upsurge like this is not a regular event in the market. Deviations only happen in about 0.3% of cases. “Data scientists strongly believe this was either market manipulation or insider trading, but are reluctant to give a definitive answer for obvious reasons,” according to a CCN report.
Another bout of speculations came into light which connected the crash to the Bitcoin Futures contract. “Another factor to note here is the expiration of CME’s BTCQ18 futures contract on August 31, which was followed by a price surge, taking Bitcoin from around $6,850 to $7,380. The settlement for that contract was due for today, September 6, and what we are seeing now is also likely to be part of a bigger trend, where the futures market is used to manipulate Bitcoin price,” according to a report from Cryptovest.
Bitcoin futures which intend to increase liquidity and decrease volatility can help large investors accumulate their holdings to eventually push out retail investors. These market manipulation claims imply that smart regulations should be brought into the cryptocurrency space to make it stable and secure for all kinds of investors.
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