For some time now, Bitcoin (BTC) investors have been suspecting that there is some level of manipulation going on with the price. That’s because Bitcoin has in the recent past been pumping and dumping without any fundamental reasons at all. Now this is all confirmed, after the justice department announced that have started an investigation into Bitcoin manipulation. The investigation will focus on spoofing and wash trading. This announcement seems to have driven up some positive sentiment into the market, with Bitcoin slightly pushing back up, and for good reason.
First, this investigation is giving investors hope that with government intervention, price manipulation will end, and the price of Bitcoin will grow more organically going forward. With organic growth, the price of bitcoin would not rise and fall as quickly as it has been doing in the recent past. This will drive in more retail investors into bitcoin, further driving up its price in the future. At the moment, low confidence amongst new investors is a major challenge to Bitcoin trading volumes, and price growth.
However, the biggest boost that this announcement gives to Bitcoin (BTC) is that it will be the precursor to the entry of institutional investors into crypto. The way the market is currently structured, it is difficult for institutional players to invest. Big players want some element of certainty for them to pump some money into crypto. No one wants to pump billions in an investment that can be manipulated and lead to unexpected losses. In essence, if the justice department can expose the fraud, and help keep things clean, institutional money will come in, and push up the price of bitcoin and other cryptos. Actually, this is could be the catalyst that will take bitcoin to its all-time highs of $20k.
This investigation could also be what the entire market needs to rebound, and gain mass adoption. That’s because the altcoins market is heavily tied to the price of bitcoin. As such, anytime bitcoin dumps due to market manipulation, the altcoins dump too, affecting their predictability in the market, especially for those pushing for adoption as currencies. This is a big disadvantage considering that most of these projects are so powerful, and have the capacity to transform entire industries. They are only held back by the constant dumps that now characterize the market, thanks to bitcoin manipulation.
So what can we expect now that the government is getting involved in trying to clean up the bitcoin market? Well chances are that bitcoin will start pushing upwards slowly, but more steadily. Without manipulation, even the sudden spikes that come out of nowhere will disappear, since they too are always the result of market manipulation. Once this news sinks into the market, bitcoin could start rising slowly towards the $10,000 mark and beyond. Currently it is trading on the 55-day moving average at around $7400- $7500 price level, and seems to be losing downside momentum.
It’s a sign that a more organic upside break is around the corner. For Bitcoin holders, the only thing one can hope for at this point is that the justice department will be successful in bringing the culprits to book, and stabilize the market.