During the second quarter of this year began a bull run in the cryptomarket, with price signals very similar to those seen during the rise of 2017. However, the market flow presents patterns and behaviors different from the past, as if it were being manipulated at pleasure. The constant increase of cryptoactives two years ago was mainly based on positive news disseminated in social networks and newspapers around Bitcoin (BTC), even Google searches on this cryptocurrency were more numerous than in the present.
The price of bitcoin has increased 167% since the beginning of 2019, and this week it reached its highest price of the year by touching the barrier of $ 14,000, although it has experienced a decline afterwards. In 2017, the cryptocurrency was positioned at 20 thousand dollars per unit, a price that collapsed with the passing of months. In addition, lately we have not witnessed the abrupt rise of altcoins experienced two years ago, where digital assets such as LiteCoin, Dash, Bitcoin Cash and even Ethereum tripled their current prices. If this is an obvious manipulation, it is most likely that these cryptocurrencies will begin their takeoff once the BTC’s massive sale and the purchase of all these tokens begin.
Will history repeat itself?
Users of social networks and investors have compared both phenomena, fearing the return of a bear market that could collapse their capital invested into a Bitcoin that exceeds USD 10,000. Market experts, such as Will McDonough and Matti Greenspan, believe that the current scenario is not like in 2017 and, therefore, the behavior of the ecosystem will be different.
McDonough, who is director of blockchain technology at Diginex Americas, said that in 2017 the total performance of the ecosystem exposed cryptocurrencies to the public eye. Investors decided to bet on a technology they did not understand, for fear of being left out of the market, says the director. Currently, many companies and investors have begun to have a better understanding of the market flow with cryptocurrencies, so they have initiated a series of smarter investments, both by the choice of digital assets and by the amounts invested. A large number of community members took advantage of the fall to $ 3,000 to start their savings in Bitcoin, which have been in bloom for more than 3 months.
McDonough has expressed not perceiving that frenzy of the 2017 market at the moment, but rather investors that use bitcoin to access the ecosystem. “I think institutional investors, wealthy individuals, and family offices have very few vehicles to expose themselves to blockchain, and the easiest for them is Bitcoin,” he concluded. Basically, Bitcoin has ceased to be the reason for the race, but a tool to reach the goal.
Is it safe to say “Market Manipulation”?
An investigation by the Pacific Northwest National Laboratory (PNNL) indicated that interest in the bitcoin market and cryptocurrencies in 2017 was highly influenced by social networks. Two years ago, cryptocurrencies became a popular topic in the mass media and the Internet. There were campaigns along Twitter and Facebook that prophesied about a $30,000 Bitcoin or even more, which made many investors think that they were still on time (and that they had to enter), for this reason, many people felt the need to enter to the market.
The research notes that Twitter users and Reddit also interacted frequently in bitcoin-related publications, echoing sensational news. On the other hand, the searches of the word “bitcoin” in Google are five times higher in that year than at present, points out a Bloomberg analysis, which is due to the same exaggerated campaign on Bitcoin, resulting in a large number of people interested in really understanding the cryptocurrency.
Overexposure of bitcoin in social networks manipulated the market, concludes the PNNL research. Today, the use of social networks around bitcoin is not as marked as in 2017. Matti Greenspan, senior analyst at eToro, believes that today bitcoin has more sustainable and justified prices that encourage adoption. Likewise, he pointed out that today people are more informed about cryptocurrencies than in 2017, when they were just getting to know them.
Factors that could affect the market: Facebook’s Libra and its influence
One of the biggest consequences of the release of Libra is the impulse (or stomp) that could give to cryptocurrencies in general terms, although it could be inferred that Bitcoin will be a very positive factor. This new project undertaken by Facebook will bring to the present the “financial revolution” of which the community has spoken so much, providing a basic need for everyone to generate income in cryptocurrencies through something as everyday as the use of social networks (not to mention freelance workers). In this way, a large audience will choose to know Bitcoin and certain altcoins after understanding their concepts through the use of Libra, which will be a stablecoin.
On a speculative level, the implementation of this cryptocurrency could translate positively into market prices; in the face of public opinion, it could mean a way of not losing track of any technological breakthroughs, meaning that these huge companies are actually putting money into this technology, which makes a pretty good image of it.
In this way, the millions of Facebook users would not only be exposed to Libra and its influence as a payment system but could be induced to know more about the market and other cryptographic projects that are already moving, as we have indicated previously. It is safe to say that several cryptocurrencies will be forgotten, but Bitcoin and at least the top 25 Altcoins will benefit from the introduction of Libra to the market.
In this scenario, and despite the corporate support that Libra has, it is difficult to think that a nascent project (with centralized characteristics, under the administration of a business association) could completely unseat Bitcoin, which supports a global system of decentralized exchange of value and resistant to censorship.
If Libra is successful, it could replace other digital payment methods such as Paypal, but it is unlikely that it will be able to bend the decentralization of Bitcoin: they do not compete at the same level.
In this case, although the cryptocurrency of Facebook could gain relevance and weight, its characteristics could be different from those of the cryptocurrency designed by Satoshi Nakamoto. In any case, both coexist, with the probability that the average Internet user prefers Libra, the credibility of the companies that support it, the good progression of the project and the visibility of it through social networks.
Even if the Libra Project presented failures, either due to differences between the members of its association or due to lack of interest of the common user, Bitcoin could be positively influenced after the public perception of this issue. Because the BTC is not managed by central authorities, it continues to function and remains the main market reference for cryptocurrencies, even shown as the most lucrative digital asset so far.
Due to the possible differences between both systems, a scenario where Libra fails would not have an impact on the perception of the value or trust that the community has in Bitcoin, in fact, it would benefit in any of the scenarios.
The Libra project seems to use the cryptocurrency boom to offer a new payment system to rival Paypal and other options already established. As far as is known, their characteristics are far from a cryptocurrency.
The corporate approach and the management of its operation by a business association call into question the possibility of making decentralized and censorship-resistant payments, as offered by Bitcoin.