Podcast: Why Bitcoin Crashed... and Top Tips on NFTs

Podcast: Why Bitcoin Crashed... and Top Tips on NFTs

2 years ago

Also on this week's CoinMarketRecap podcast, all of this week's headlines — including a congressman who invented Mongoose Coin, OpenSea's U-turn, and the cryptocurrencies trending on Google.

Podcast: Why Bitcoin Crashed... and Top Tips on NFTs

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Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts

CoinMarketRecap, hosted by Connor Sephton, aims to break down the week's crypto news in a fun and accessible way.

Research continually shows that consumers find cryptocurrencies difficult to understand — and we're determined to change that.

What Happened to Bitcoin?

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Bitcoin fell by $10,000 in a matter of minutes last weekend — dragging down the rest of the crypto markets with it.

Why did this happen, and what does it mean for the bull run? 

Blockware's lead insights analyst, Will Clemente, describes a perfect storm of "low liquidity" and high levels of open interest in the futures market. As prices fell, a "cascading effect" led to billions of dollars in BTC long positions being liquidated — creating carnage for traders. Explaining how leverage works, he said:

"If I'm 10x long, that means the price only has to go down 10% and I'm out. If I'm 20x long, the price only has to go down 5% and I'm liquidated … One person gets liquidated, then that puts a forced sell onto the book that pushes prices further down … It has this kind of snowball effect of this person triggering the next person's stop loss or liquidation, which triggers the next guy and the next guy."

He explained that many of the people who ended up losing money using leverage were everyday investors.

Will believes that $53,000 is a crucial level for Bitcoin to reclaim — and beyond that, $60,000 for confirmation of bullish momentum. However, he doesn't believe that the loss of BTC's $1 trillion is too big of a setback:

"The type of market participant we have now, they're much more patient. And they're much less emotional. Now we have institutions … these guys aren't gonna chase the price up. They'll wait for prices to come back to them." 

He also thinks there's a "reasonable chance" that funds will be willing to take on new risk in the first quarter of 2021 — but that could depend on "extraneous macro factors" such as the Federal Reserve increasing interest rates, or developments relating to the Omicron coronavirus variant.

'Bitcoin Trial of the Century' Ends

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It's been described as "Bitcoin's trial of the century" — a legal showdown over the 1.1 million Bitcoin that was mined by the cryptocurrency's inventor, Satoshi Nakamoto.

For years, Australian entrepreneur Craig Wright has claimed that he is Satoshi Nakamoto — but many in the crypto community don't believe him. 

Things get even more complicated. Dr Wright was friends with Dave Kleiman, a computer scientist who died in 2013. Kleiman's family have alleged that he had helped invent BTC — and in a court case in Florida, argued his estate should receive half of the Bitcoin that Satoshi mined.
After many days of deliberations, the jury has reached a verdict. Kleiman's estate won't get any Bitcoin, but they will get a share of $100 million in compensation.

Law360 reporter Carolina Bolado, who covered the lawsuit in Miami, joined Connor to discuss the outcome. She said: 

"This could have been half a trillion dollars. This could have been much, much, much, much worse for Craig Wright. And I think he ran a real risk because the man is the most unlikable, awful person I've ever seen on the stand … I'm really curious how he came across [to the jurors] because he just does not come across as very trustworthy or credible on the stand." 

Although this is a good outcome for Wright, Carolina said $100 million is still a lot of money for the plaintiff — and pre-judgment interest over the past few years mean they could get $25 million to $50 million on top of that.

News Roundup: OpenSea IPO, El Salvador, Google Trends

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CoinMarketCap's Molly Jane Zuckerman joins us to discuss some of this week's other crypto headlines.

OpenSea annoyed users this week after the company's new chief financial officer suggested that the NFT marketplace is planning a stock market debut. Many felt OpenSea should launch a governance token and reward the community instead. Brian Roberts later blamed inaccurate reporting and insisted there were no plans for an initial public offering.

Plus, a prominent environmentalist in El Salvador has questioned Nayib Bukele's plans to build a Bitcoin City — arguing the country suffers from regular electricity outages, not to mention water shortages. Are the president's ambitious plans in peril? 

And last but by no means list, Google's Year in Search for 2021 reveals that "Dogecoin" and "Ethereum price" were some of the most popular search terms in the News category this year. Connor and Molly Jane delve into the report to uncover other crypto trends.

Making a Profit on NFTs: The Do's and Don'ts

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Chainalysis has released a new report revealing the techniques used by successful NFT traders.

The blockchain intelligence firm says certain tactics can dramatically boost a collector's chances of making money.

Ethan McMahon, an economist at Chainalysis, explained that collectors who are on a whitelist are much more likely to generate a profit. He told Connor:

"It really pays to be informed … If you're an early adopter, an early promoter of these projects, you end up being put on the whitelist. When it comes time to mint an NFT, you're able to mint at a vastly lower price, and so that ends up making the whole difference when it's time to sell." 

Ethan also explained how some traders find success by "flipping" non-fungible tokens on secondary markets.

New episodes of CoinMarketRecap are released every Friday — subscribe to us on Apple Podcasts and Spotify!

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