The wild ride of Crypto accuses new liquidity worries
The wild ride of Crypto accuses new liquidity worries
The first weekend in December was not fun for cryptocurrency investors. When Friday evening on Wall Street gave way to Saturday morning, the prices of the leading tokens broke down, with Bitcoin lost about a fifth of his value.
If you sold exactly, you remain a mystery, but a tempting note was dropped by one of the more networked people in the world of digital assets: Brian Brooks. As the top banking supervisory officer under Donald Trump, he worked as a chief legally officer of a crypto exchange, coin base, and briefly as a chief executive of another, Binance US, and now leads the Bitcoin miner Bitfury.
At a hearing from the Financial Service Committee of the House of Representatives on Wednesday, Brooks expressed the possibility that only one or two large actors could have been involved in the crypto route, who try to reduce large-fitting positions in a market that is open around the clock that remains open when most people try to sleep.
he suggested the proposal when he was asked by Al Green, a Democrat from Texas, whether he believed that the latest episodes of "extreme volatility" on the cryptoma markets are a sign that something is going wrong and that investors like the bubble like that of the financial bubble.
Brooks, who held the position of the incumbent currency examiner in the Trump administration, attributed the recent dramatic price movements to the “early phase” of market development. The liquidity is so limited-he estimated that about 80 percent of Bitcoin owners have never sold-that if a large crypto investor sneezes, everyone gets a cold.
"A person who dissolves their position can have a massive impact on the price," said Brooks. "So if you hear from a day on which there was a huge drop in prices at Bitcoin, it often turns out that there were one or two large traders who dissolved a levered position, and the vast majority of the owners have had enough trust that they have never sold it."
Bitcoin bulls like Brooks have their reasons to see a strong drop in price as a positive indicator. Crypto tokens have previously fallen strongly to resume their apparently relentless increase.
But his analysis also helps to explain why so many current regulatory authorities - above all Gary Gensler, President Joe Bidens election as chairman of the Securities and Exchange Commission - remain so suspicious of the cryptoma markets.
If a small number of investors can easily move a market - we assume in this case for fundamental reasons - a similarly small number may manipulate it.
Loose regulations in countries outside the United States only increase the risks: the price volatility in the crypto spot market can quickly be reinforced by the structure of risky derivative positions abroad.
"People take extremely foreign positions because the non-US platforms allow this," said Faryar Shirzad, Chief Policy Officer from Coinbase, my colleague Adam Samson this week at the FT Global Boardroom conference. "So if you have movements, you will find them accelerated."