Bitcoin a Safe Haven? With all the Pump and Dumps, YOU DECIDE? - 03-22-2020 SUN 8am -
Bitcoin has plunged to two-month lows since Sunday, possibly due to an over-$100 million liquidation by PlusToken scammers, analysts say.

The top cryptocurrency fell by nearly 10 percent from $8,900 to $8,000 on Sunday of early 2020 to register its single-biggest daily decline since September 2019, according to Bitstamp data. Then on Monday, bitcoin (BTC) slipped further to two-month lows below $7,700 during the Asian trading hours.

At press time, the cryptocurrency’s global average price, as calculated by CoinDesk’s Bitcoin Price Index, has recovered somewhat to $7,925.

While the sudden price drop has taken place alongside a bloody day in the traditional markets, there may be another factor driving down bitcoin’s value so severely.

“The sudden drop in prices seems to arise out of the selling of BTC by PlusToken,” Ashish Singhal, CEO of the cryptocurrency exchange CoinSwitch.co told CoinDesk.

On Saturday, scammers in control of the remaining wallets of the China-based Ponzi scheme moved 13,000 BTC (worth around $101 million currently, but close to $120 million at the time) to so-called “mixers” and may have offloaded their holdings, causing prices to fall sharply, according to Singhal. Mixers are used to obfuscate the source of a crypto transaction by outputting batches with different coins than are sent in.

PlusToken had posed as a cryptocurrency wallet and swindled investors out of possibly as much as $2 billion in cryptocurrency by promising rewards. While six of its masterminds were arrested in June 2019, the authorities could not seize 180,000 BTC, 6,400,000 ether (ETH) and 111,000 tether (USDT), which were sent from scam victims to PlusToken wallets, according to Chainalysis.

Trader Kevin Svenson has also associated the latest price drop with PlusToken holdings being dumped into the market.

People in control of the PlusToken wallets have been liquidating their stolen bitcoins since August and likely played a big role in pushing bitcoin down from $12,000 to $6,500 in the four months to November. as noted by Ergo Research at the time.

Back in December, the scammers still controlled 20,000 bitcoins, of which, 13,000 look to have been moved for liquidation over the weekend.

The onchain activity on Saturday was again noted by Ergo Research:

Some, of course, may argue that moving coins to mixers does not necessarily result in liquidation and the sell-off seen from Sunday was caused by the coronavirus-led crash in the global financial markets.

Indeed, negative global macro factors – such as the equity market sell-off and record low in the U.S. government bond yield – may have also played a role in pushing bitcoin lower, as noted by popular analyst Jacob Canfield.

Still, a major PlusToken liquidation could well have weighed heavy over bitcoin’s price if it did occur. The cryptocurrency was trading steadily above $9,000 on Saturday as the scammed coins were being moved to mixers and fell sharply the following day. Further, traditional markets were closed over the weekend.

Canfield too listed a PlusToken dump as one of the factors possibly responsible for bitcoin’s price drop.