Bitcoin price is trying to win back over $ 18,000 after flirting with the mid-range of $ 17,000 during the night hours. The leading cryptocurrency by market capitalization has only continued to bleed to death in the past few days since MicroStrategy CEO Michael Saylor announced his company’s plans to offer convertible senior notes to generate $ 650 million in revenue for the purchase of Bitcoin achieve.
Whales of this scale and size rarely reveal their positional plans in advance, which is what makes the news remarkable. However, the market has not yet priced in such enormous amounts of information. There is an early crypto backer who questions efficient market theory. Here’s what it means and why the market has still not responded to information about the sudden, substantial demand.
Bitcoin price falls as Corporate Treasury Whale publicly announces an increase in position size
The software company MicroStrategy, listed on the Nasdaq, triggered the first wave of company acquisitions of the first cryptocurrency. Jack Dorseys Square Inc followed suit shortly after, sparking a wave of FOMO in the fourth quarter.
The domino effect caused Bitcoin to retest $ 10,000 at a single stroke to a new all-time high. The $ 10,000 uptrend lasted only a handful of months, but it put the crypto asset on major players’ radar for the first time.
Related reading | Too overbought by FOMO: Why Bitcoin is overdue for a steep correction
Since the initial shift in sentiment toward using the asset as a store of value and hedge against inflation primarily caused the upside burst, why didn’t Saylor raise enough money to buy another $ 650 million worth of BTC? hardly had any influence?
Bitcoin has only dropped on the news a whale is increasing its position so sizably | Source: BTCUSD on TradingView.com
Why is pricing for the crypto market not continuing with new demand information as supply wars continue?
Bitcoin, valued at $ 650 million at current prices, equates to over 36,000 BTC – a whale-sized position for crypto standards. The capital is sufficient to exceed the total market capitalization of a cryptocurrency from rank 39 and to put things in perspective.
The fact that the crypto market has not yet priced in such information makes Nic Carter question the “efficient market theory”. According to Wikipedia, an efficient market theory in a nutshell is the idea that asset prices currently reflect all the information available.
But Saylor made his intention to buy such a large amount of Bitcoin a completely public and pre-planned affair, but the price per BTC has fallen since then.
Related reading | The “most profitable buy signal” is triggered when Bitcoin consolidates under ATH
However, there could be a few reasons for this. Despite the fact that Bitcoin has real inherent value, its price is largely determined by speculation and it is extremely difficult to establish a fair market value.
With the crypto investor base assuming that Bitcoin will almost certainly hit prices of $ 100,000 or more in the next year and beyond, that information was priced in well before Saylor’s ad, causing the cryptocurrency to rally too quickly has overheated.
FOMO has started a strong uptrend as people currently have little idea how to value this asset. Because of this, sales are just as fast. Speculative asset trends can stretch in either direction.
Another theory is that investors are somewhat reckless with Saylor’s “all-in” approach to Bitcoin given the uncertainty that still lingers about the asset.
Regulation could soon become a factor, quantum computers are in development which could make cryptography to protect Bitcoin less secure and more secure. Essentially, MicroStrategy itself also speculates on Bitcoin, and speculation in the business world is not always the safest and most well-founded (micro) strategy.
Featured image from Deposit Photos, Charts from TradingView.com