Upbit Cryptocurrency Exchange Under Investigation
On 11 May, news broke out that Upbit cryptocurrency exchange in South Korea was being investigated by authorities. Upbit is alleged to have manipulated its financial statements.
Following this, the price of Bitcoin and other cryptocurrencies, in general, took a bit of a nose-dive. As usual, the crypto community had to look for the reasons. As you might already know, the only obvious explanation was the news of the investigations going on in South Korea. There are, however, reasons why this news might not be entirely responsible.
Mt. Gox Again
Even years after getting hacked and costing several users lots of Bitcoin, Mt. Gox is still somehow haunting the Bitcoin community. Here is a tweet from Andy Hoffman explaining the reason for the price dip.
“Ah, so here’s the answer! Another 24,000 #BTC moved from the Mt Gox Trustees wallet yesterday morning, just before prices dumped, taking his total down to 137k. As usual, #Bitcoin down for NON-FUNDAMENTAL REASONS,”
This is not the first time the Mt. Gox trustee has moved such a large number of Bitcoins to an exchange. Such a move usually signals that a huge dump is about to happen and causes other traders to panic sell. Many have wondered why such a high number of Bitcoins would not be traded off exchanges. It is also strange that someone wanting to sell that many coins would do it in a manner that would push the price down. The actions of the Mt. Gox trustee have come off as attempts to bring down the Bitcoin price.
Volume of Bitcoin Traded on Upbit
Upbit is in fourth place on the list of cryptocurrency exchanges by daily volume traded. It is, however, sixth when it comes to Bitcoin volume traded daily according to data from CoinMarketCap. This makes it look like the exchange handles a large percentage of Bitcoin trades. With over a hundred cryptocurrency exchanges handling large volumes of Bitcoin trades daily, being sixth-placed doesn’t necessarily mean a huge percentage of daily Bitcoin trades by volume occurs on Upbit. Only about 1.4% of global Bitcoin trading takes place on the exchange.
Most people would agree that with only 1.4% of Bitcoin volume on exchanges, Upbit being under investigation should not be enough to trigger a $1000 dip in the price of Bitcoin.
Bear or Bull Market ?
The dip in price could be due to a combination of both factors and others we are unaware of. Whatever the case, it’s a sign that we are not yet out of the woods and another bull run is not yet in full force. Even though we witnessed some bull market type crazy price action during the last couple of weeks, we will have to wait a couple more weeks to figure out where this is going.