After having defended the $6,000 support level for nearly six months and maintaining its lowest level of volatility to date from August to November, Bitcoin has finally broken the floor and fell to its lowest price level since October 2017.
The Incident
The event took place on November 15 when the crypto market saw before its eyes the disappearance of more than $27 billion. The valuation of the total market cap fell from $210 billion to $183 billion. The intensity of the drop was so high Bitcoin’s chart shows the free fall of Bitcoin price.
While Bitcoin was defending the $6,000 support level for nearly six months, it also maintained its lowest volatility to date from August to November. But the recent sell-out made Bitcoin drop more than 11 percent in a matter of hours.
But the crypto market and individual investors are not the only ones affected by thus drop. In the financial markets of Japan and Korea, even the traditional finance sector which has companies dealing in digital assets has been impacted badly. In Japan, SBI Holdings and Monex Group, both saw the price of their shares slump along with the price of Bitcoin.
SBI Holding Slumps 3%
SBI Holdings is a Japanese banking giant. Currently, it operates SBI Ripple Asia and is also the leader of many large blockchain related initiatives. As the sell off began in the crypto market, SBI Holdings saw it’s share price drop 3 percent.
According to Fundstrat Global Advisors partner Rob Sluymer:
“This week’s breakdown produced significant technical damage. That will likely take weeks, if not months, to repair to create a durable enough price ‘structure’ to support a multi-month rally.”
Fundstrat is one of those firms which are generally positive when it comes to mid to long-term targets for Bitcoin and cryptocurrency. But after the sudden downfall, Fundstrat has stated that the large correction of the crypto market experienced on November 15 could lead digital assets to endure a consolidation period which may last from weeks to months.
Soichiro Tsutsumi, a Tokyo based trader at eWarrant Japan Securities also expressed his views regarding the market fall. He stated that the reason for the downfall in the stock prices of major financial institutions like SBI Holdings is that investors feared cryptocurrency ventures will see a stagnant few months in the mid-term due to the correction.
He added:
“The $6,000 mark, which had been serving as a floor for a long time, gave way — this feels like a bit of a dangerous sign. Companies most impacted by the price move would be the ones with business models reliant on a client pool, on concern that the number of client accounts won’t expand.”
Monex Group and Coincheck
The publicly listed technology company Monex which is based in Tokyo recorded the steepest drop in stock price following the crypto market crash. The reason for this fall may be attributed to the fact that Monex Group is the owner of Coincheck which was formerly the biggest cryptocurrency exchange in Japan. But in January, it suffered a $500 million hacking attack that shattered its reputation. It is only recent that Coincheck, after securing a license from the Financial Services Agency (FSA), reopened trading in Japan. The FSA has provided the Japanese cryptocurrency exchange market a self-regulatory status. This means that crypto exchanges in Japan are allowed to govern themselves.
But to balance this liberty, it has now tightened the process of approving exchanges making it extremely difficult to get license to operate in Japan. Exchanges like Coincheck will also find it difficult to reapply. This is the reason why the re-opening Coincheck’s trading platform is acknowledged as a positive development for Monex. But even this did not prevent the stock price of Monex to see a fairly big drop in the past 24 hours.
The Future
Investors in the public stick market are panicking because of high level of volatility in the crypto market. This is a matter of concern because the crypto market was fairly stable in the past few months. But the impact of this downfall on Japanese and South Korean finance industries is expected to be short-lived. This effect of crypto market on publicly listed companies may subside if the market stabilizes at a low price range.
