The crypto market has experienced a significant decline, with Bitcoin down three percent on the 24-hour and Ethereum down four percent, along with other cryptos down as much as ten percent. While some attribute the decline to the PPI and the DOJ’s stance on crypto, others think that the decline is due to Genesis trading preparing for chapter 11 bankruptcy. If this is the case, Genesis may have to cover its positions in cryptos, including Bitcoin and Ethereum, and investors have already started pricing in this possibility. However, this decline does not necessarily indicate a bear market but may be a healthy pullback after an explosive move.
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The Crypto Market is Experiencing a Red Wave
The crypto market is currently experiencing a lot of red, which has scared many people. It seemed like everything was going to be fine, with prices returning to their former levels after initially falling due to some weird news earlier that day. However, things have taken a turn for the worse, and someone is selling, causing fear in the market.
Reasons for the Fall
Bitcoin is down by 3% on the 24-hour timeline on Ethereum, down by 4%, and many other cryptocurrencies are down by 4-10% or more. Many people believe these dips are due to inflation news or due to the DOJ. However, it all ties back to Genesis Trading preparing to declare Chapter 11 bankruptcy, and its creditors are expecting it to happen by early next week, if not the end of this week. DCG is doing everything in its power to protect its brand name, even if it means sacrificing a portfolio company.
Fears of Large-Scale Dumping
The fear is that Genesis Trading might have to cover its losses with cryptos if it, unfortunately, declares Chapter 11 bankruptcy. This fear isn’t baseless, as in the past, a lot of individuals thought that DCG was dumping on the market about a month ago, which resulted in massive changes in prices of many cryptocurrencies. If Genesis is indeed trying to liquidate its assets, it would explain the current market trends.
Healthy Market Correction
Despite all these factors, it is essential to remember that this is still a healthy market correction. The market has been experiencing a healthy pullback after an explosive move. It’s normal to see some consolidation and some sideways action before we break through again. As an investor, it is always good to have some cash on the sidelines in case of contingencies like this one. At the moment, it is best to be cautious and wait to see what happens in the market before making any significant moves.
