The recent super-crazy FUD in the cryptoverse

Howdy folks 🤠 how was your day? Today is Monday and as usual, I was super lazy to do my daily routine. I usually exempt Mondays from my weekly routines and I just flow with whatever it brings, which is why I spent a major part of my morning examining the crypto market and wondering: WHAT THE HELL IS GOING ON?

The market is looking much better now but it was very bloody when I checked in the morning. If things were alright, BCH wasn't supposed to cross below $113 (the yellow horizontal line) because that is a very strong area of support but BCH crossed it and even went down to $110, which actually signifies something big recently happened in the cryptoverse. I checked BTC and realized where the problem is coming from; BTC is dragging BCH down (as usual).

BTC has strong support around the $20k price but it punched through that and fell to 19k, so there was something definitely wrong. I decided to snoop around the internet to try and figure out what is happening and my go-to place for sniffing out market info and gossip is coinmarketcap live chat

I noticed everyone saying Mt Gox is responsible for the recent crash, but who is Mt Gox? I did a Google search and according to Wikipedia;

Mt. Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan.[1] Launched in 2010, it was handling over 70% of all bitcoin (BTC) transactions worldwide by early 2014, when it abruptly ceased operations amid revelations of its involvement in the loss/theft of hundreds of thousands of bitcoins, then worth hundreds of millions in US dollars

Model Source

Apparently, they have been recovering the lost Bitcoins and they recently got hold of about 140,000 BTC which they will give back to the account owners. So, imagine that amount of BTC suddenly unloaded into the market, it will cause a huge bloodbath because the price of BTC will dip so bad and it will drag all other altcoins, including BCH.

Now, what actually caused the whole FUD was some unverified tweet made on Twitter earlier this month. The tweets quickly gathered momentum and spread around Twitter and everyone believed them immediately, this made many people to panic and they started selling their BTC. What was the tweet? See one of them below

People will get scared when that amount of BTC is about to be unloaded into the market because like I said earlier it will cause a huge dip when that happens. With the way I see it, there are two categories of people who sold their hodling:

1. Inexperienced traders who are scared of losing their investment, so they quickly sell and get out of the market before a huge dump happens.

2. Strategic traders who want to take advantage of the dip. They sell their coins and buy them back when the price dips

Some of Mt. Gox creditors debunked the rumor and said there won't be any distribution of the coins this week or even anytime soon, so all the fear, uncertainty, and doubt wasn't necessary. But the damage had already been done by those Twitter accounts that started and spread the FUD

BTC and BCH might be recovering now but September (or as they call it in the cryptoverse: Septembear) is coming and everyone is expecting another winter season (a winter season inside another winter season!) for BTC and most altcoins because of the Ethereum merge that's coming up next month.

We still don't know when Mt. Gox will release the 140k BTC to its creditors but when that happens, it will be a big bloodbath, everywhere will be bloody red 😆 you might think BCH will only be affected indirectly because of its relationship with BTC but it will actually be affected directly because it's part of the payment methods that will be used.

If most of the creditors that get their coins back decide to sell, it will seriously drag BTC and BCH down but at least we don't have to worry about all that for now, the repayment won't be happening anytime soon. And also, Mt Gox won't be releasing the entire 140k BTC all at once, they will do it bit by bit and at least that won't have a huge effect on the price of BTC and BCH if the creditors decide to sell.

Thanks for reading 💖💖💖

Monday August 29, 2022