Analysts said “not China” and explained reasons for the drop in Bitcoin – here are the details
The price of Bitcoin fell after the Chinese police announced that $ 4.2 billion worth of cryptocurrencies were seized. However, analysts say the drop has little to do with it.
Bitcoin (BTC) price has dropped significantly in the past 48 hours after negative developments peaked. Basically, there were three key factors likely contributing to the BTC price drop.
Reasons for the decline in Bitcoin
The primary factor was that the Chinese police captured $ 4.2 billion of cryptocurrency. OKEx dissolver funds, among others, and the US Treasury reportedly acted to regulate crypto wallets.
However, Bitcoin market analyst David Puell said that Bitcoin seized by Chinese police is likely already sold. If BTC has been sold before, it will not put any additional selling pressure on BTC in the future.
Bitcoin seized by the Chinese police has already been sold – the worst is over
Researchers at Ergo have been tracking the movement of funds seized by Chinese police for over a year. Movements on the chain show that BTC has already been sold.
Leading on-chain researchers confirmed that the captured BTC was likely sold over the past year, Puell said.
“Here’s the deal with all the PlusToken news we’ve seen in the crypto media lately. The thing is, after the Chinese government has stated the official situation, it is now being reported. Ergo made this story available to the community on the chain more than a year ago. As these ‘official’ sources say, Bitcoin was simply captured and stored as part of China’s national treasury. As I understand it, most of Bitcoin has already been sold under very special conditions. “
The first news about the Chinese police seizing 194,775 BTC, about 1% of BTC’s circulating supply, caused uncertainty in the market.
However, now that more details are emerging and the seizure will not put high selling pressure on BTC, it does not appear to have much to do with the decline.
In the medium term, it is reported that the US Treasury plans to regulate crypto wallets. Coinbase CEO Brian Armstrong wrote on November 26:
“Last week we heard rumors that the US Undersecretary and Secretary of the Treasury Mnuchin is planning to make some new regulations regarding crypto wallets before the end of his term. I am concerned that this will have unwanted side effects and I wanted to share these concerns.”
If the regulation goes into effect, Armstrong stated that exchanges may need to take steps to verify the identity of wallets linked to exchanges. For example, if a self-hosted wallet is to send money to an exchange, the exchange must record the identity of the owner of the wallet.
This causes a lot of problems because it is difficult to record the IDs of unsupervised wallets. Armstrong stated that users do not want to provide further information for privacy reasons.
“Finally, many buyers (in the US or abroad) who value their financial privacy may not want to upload more identity documents to various companies that could be hacked or stolen.”
Due to the many problems that can arise in such a complex piece of legislation, industry executives doubt it will be approved.