Why Today’s Cryptocurrency Crash Could, in Part, Be Blamed on Burning Man
Cryptocurrencies plunged suddenly in afternoon trading on Wednesday, spurring a guessing game of potential catalyst among enthusiasts and investors. The price of Bitcoin dropped below $ 10,000 for the first time since July.
The largest digital token fell as much as 5.6%, before trading at $ 9,686 as of 3:40 p.m. in New York. Peer coins also sold off, with Bitcoin Cash falling close to 4% and Litecoin dropping about 8%.
As with many things crypto, enthusiasts and skeptics alike were quick to point the finger on Twitter and Reddit, though it remained anyone’s guess as to what the catalyst was.
“From our end, it looks like it was a sell-off to cash settle futures that are coming due on Friday for BTC,” said Dave Balter, chief executive of Flipside Crypto in Boston. His firm tracks blockchain transaction data, differentiating between users and speculators, and includes large trades and their originations.
Thin trading volumes likely exacerbated the moves. That made sense to Jeff Dorman, chief investment officer at Arca.
“It’s the week before Labor Day. Half of crypto is at Burning Man and the other half is sitting on their hands doing nothing,” he said. “Volumes are low and it takes very little to move markets right now, and you have big futures/options expirations coming up at the end of the week. The only definitive thing I can point to is that the move was led by declines in EOS, ETH, XRP, BCH, LTC and other large-cap tokens that have been out of favor for months. I just don’t think there are a lot of investors willing to defend price right now.”
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