Nigerians Pull Out of Bitcoin As Cryptocurrencies Crash
With a crash in the value of bitcoin last week, Nigerians are pulling back to cut down on their losses in the cryptocurrency market as their stake in the market declined dropping to N1.09 billion as against N1.51 billion which it was at the beginning of August this year.
The decline has been sustained comparing the value of Nigerians stake in bitcoin which was N1.733 billion as at July this year. Last week, $40 billion was wiped off the value of Bitcoin as traders rushed for a sell off to take advantage of a rise in value of the cryptocurrency.
Bitcoin was not alone in the value loss as other cryptocurrencies also suffered major price losses. The price of bitcoin which was around $7,400 at the beginning of last week currently stands at $6,510. Etherum is down to $219 while Bitcoincash is down to $504.
Prior to Wednesday, throughout the month of August, Bitcoin showed its highest level of stability since June of 2017. Between August 8 and 26, the price of Bitcoin remained relatively stable in the $6,000 region, before initiating an overdue corrective rally above the $7,000 resistance level.
But, a rushed rally from the $7,000 mark to $7,400 within a four day period led sell pressure to build up, allowing bears in the cryptocurrency exchange market to take over, leading Bitcoin to fall by a large margin.
ThinkMarkets chief market analyst, Naeem Aslam said that speculators have unnecessarily intensified the downtrend of Bitcoin by overselling Bitcoin in the global exchange market. Aslam emphasized that the downward trend of Bitcoin has not changed since December of 2017, when the cryptocurrency market achieved a $900 billion valuation and initiated a rapid decline:
"Speculators have gone crazy and they are trying to squeeze as much blood out of this trade as they can. Bitcoin hasn't changed what it was since last December, so what is the panic?" Aslam queried adding that it is difficult to pinpoint specific factors that have led the price of Bitcoin to drop substantially in recent months.
However, cryptocurrency trader Brian Stutland of CME holds a strong belief that the price of bitcoin will surge back up to $7,250 in the short-term. "I'm looking at the September futures contract and I'll be willing to buy it, actually at this point. $6,450 is my level, looking for that September futures contract to trade up to $7,250 on the CBOE futures contract with a stop out at $5,950" he stated.
Stutland while noting that volatility in the market is one of the things that scares investors away, said "I would like to see some of that volatility contract a little bit to get people a little bit more comfortable because as you see those big moves, that sort of backs investors away. When we hit those certain technical levels then people want to get out right away."
He also maintains that we are in the early stages of the bottoming process after having reached all-time highs in late December 2017 and early January 2018. According to the Stutland, it's going to take a full year or more for the prices to bottom out and for people to become comfortable with this reality. Stutland also noted that there will be shake-ups, saying "Bitcoin, Ethereum, and some of the leaders will stay. A lot of the altcoins out there will go."
Although regulator in the Nigerian financial system had warned against Nigerians putting their funds in the cryptocurrency market, Nigerians have remained adamant and have continued to venture into the market that has since gained traction worldwide.
While some had linked the crash in the cryptocurrency market to the delay in the launch of the Bitcoin trading desk operation by Goldman Sachs, the bank said it has not closed its operation but merely delayed it to focus on a more urgent initiative that is cryptocurrency custodianship.
"Goldman has only delayed the process, they still have invested a lot of money and talent in this area. Investors must know it is very normal for banks to delay the IPO process if the market conditions are not favorable and over here we are talking about starting something completely new. Goldman has its fingers in many of the areas when it comes to Bitcoin, so stop thinking about it and focus on the price," a note from the bank said.
Shortly after the reports, the Chief Financial Officer of Goldman Sachs said on stage at the TechCrunch Disrupt Conference in San Francisco, that this was "fake news". Source: