Why bitcoin collapses and who attacks the cryptocurrency market

Bitcoin evangelist Konstantin Nikonov tells about the recent bitcoin collapse by 15% and the ‘opposition’ of Bitcoin and Bitcoin Cash

Why bitcoin collapses and who attacks the cryptocurrency market Photo: ixbt.com

The bitcoin rate has recently fallen by 15% compared to the absolute record the cryptocurrency achieved on Monday. Realnoe Vremya turned to Russian bitcoin evangelist Konstantin Nikonov, who told about the reasons for another devaluation of the cryptocurrency, the recent rapid growth of bitcoin, and also about whether it is worth to invest in Bitcoin when there is Bitcoin Cash.

Singapore is to blame?

Bitcoin has recently dropped by 15% (the rate fell to $16,626) compared to an absolute record on 17 December when bitcoin was $20,089. Judging by the first publications in the press, which appeared immediately after bitcoin collapsed, experts linked the incident with serious concerns with cryptocurrency's revaluation.

The thing is that on Tuesday, a day before the drop, the Monetary Authority of Singapore made a statement warning about the risks associated with investments in ICO and cryptocurrencies, which are not legal tender, they are not issued by any government and are not backed by any asset. The agency advised to 'to act with extreme caution and understand the significant risks' they investors take on if they choose to invest in cryptocurrencies.

Besides, a 15% drop could trigger the statement of co-founder of Bitcoin.com Emil Oldenburg. In an interview to Business Insider, he stated that he sold his bitcoins as this cryptocurrency ''has no future as a tradeable currency.'' The speaker also pointed out several disadvantages of bitcoin: high fees, falling lead time of transactions, as well as network bandwidth limited by the block size.

Realnoe Vremya turned to well-known Russian bitcoin evangelist Konstantin Nikonov to find out whether voiced events could affect the cryptocurrency fall and what is the reason for a rapid growth of bitcoin in the recent days.

Konstantin Nikonov: ''First and foremost, the reason for the fall was the rapid growth rate of bitcoin before that. Such growth cannot be without further correction.'' Photo: vk.com

''I do not recommend Bitcoin Cash for long-term investments''

Konstantin, do you agree with experts who have stated that the reason for the drop was the warning of the Monetary Authority of Singapore as well as the statement of co-founder of Bitcoin.com Emil Oldenburg? Perhaps, do you see other reasons?

First and foremost, the reason for the fall was a rapid growth rate of bitcoin before that. Such growth cannot be without further correction. In this case, any negative news can affect market launch. I think that the caution of the Monetary Authority of Singapore was one of the reasons for a decline. The statement by Oldenburg was the result of the beginning of the fall. He just took advantage of the situation to start a speculation for a fall with parallel actions for appreciation of Bitcoin Cash, in which Oldenburg is interested.

Emil Oldenburg is CTO of Bitcoin.com that belongs to Roger Ver. It is known that Roger Ver is behind Bitcoin Cash, plus he is actively promoted hardwork Segwit2x, and when they refused from it, he made an attack on bitcoin in November with a simultaneous pump of Bitcoin Cash. It is known that at that time Roger Ver sold 25,000 bitcoins. This time the attack is very similar. Again, on the background of large fees on transactions (which can be achieved through spam transactions including) it is created a negative news background and simultaneously sold a large number of bitcoins. And, at the same time, the rate of Bitcoin Cash is increasing.

Just look at his tweets: ''The reason there is so much hostility from Bitcoin Core towards Bitcoin Cash is because Core knows they have stolen the name but are advocating a completely different system than what was originally described by Satoshi. Bitcoin Cash is Bitcoin.''

Konstantin Nikonov: ''On December 19th, it was opened the sales of ASIC miner Bitmain S9 for bitcoin mining and Bitcoin Cash. Moreover, this equipment is sold only for Bitcoin Cash.'' Photo: youtube.com

I would put forward a conspiracy version. It is known that on December 19th, it was opened the sales of ASIC miner Bitmain S9 for bitcoin mining and Bitcoin Cash. Moreover, this equipment is sold only for Bitcoin Cash. The sales started yesterday and yesterday they were over (due to high demand and artificially created shortage). Then it began a sharp growth of Bitcoin Cash. The profit for the seller of the equipment is obvious: he gets a lot of Bitcoin Cash, inflate the rate through manipulations on the market, sells Bitcoin Cash, gets the profit twice larger. The growth rate at the peak was 100% (from 0,13 BTC for BCH to 0,3).

Do you link, along with Singapore, the recent sharp growth of bitcoin rate with speculative activity? What explains such assumption?

In recent days, it is the beginning of futures trading for bitcoin on traditional exchanges has primarily influenced the growth rate of bitcoin. This means that bitcoin, in fact, has become available for trading to traditional stock market players. It is very positive news for bitcoin, which has led to the rate increase.

Oldenburg is not the only one who is telling about the shortcomings of Bitcoin and benefits of Bitcoin Cash (the block size, for example). Do you see any prospects in investing in Bitcoin or investors should pay attention to Bitcoin Cash?

Bitcoin Cash has no significant advantages over Bitcoin. The increased size of the block is a temporary solution, which also can lead to a centralization of Bitcoin Cash mining. There is no any serious team of developers behind Bitcoin Cash, like in the case of bitcoin. In fact, Bitcoin Cash is a cryptocurrency, completely controlled by a small number of people, who use it to attack the original Bitcoin and to manipulate the market.

That is why I cannot recommend Bitcoin Cash for long-term investments. Bitcoin was and remains the most reliable cryptocurrency with time-tested mathematical model, great developers, a large number of independent miners and universal trust. Exactly Bitcoin I recommend for long-term investments. And periodic drops can be used in order to buy Bitcoin at a good price.

Four days ago, bitcoin surpassed $20,042 amid expectations of the beginning of futures trading on the cryptocurrency in the world's largest mercantile exchange CME Group. Photo: twitter.com/bits_media

Rapid growth after a serious fall

It should be reminded that only a month ago the exchange rate of Bitcoin had a record decline, losing 28,89% in a week. So, from Friday, 10 November, the rate dropped by 9,5%, and if you count from Wednesday, when it was a new record (7,800$ per Bitcoin), bitcoin decreased by 29%. The main reasons for the incident experts called unmet expectations of market participants from hard forks of bitcoin SegWit2X and the subsequent withdrawal of investors to Bitcoin Cash.

Two weeks later, the rate of the world's most popular cryptocurrency Bitcoin broke the psychological mark of $10,000 — then the Bank of Russia warned about a possible bubble in the market, and experts urged the authorities to begin to collect taxes on transactions. This growth did not stop here — on December 7th, bitcoin broke a record of $14,000, $15,000, $16,000 and $17,000, and the next day, the cryptocurrency exceeded $18,000 for the first time in the history of trades. Four days ago, bitcoin surpassed $20,042 amid expectations of the beginning of futures trading on the cryptocurrency in the world's largest mercantile exchange CME Group. At the time of writing this material, after all the experienced shocks, the bitcoin rate was $17,540.

By Lina Sarimova