Bitcoin price makes an effort to get back more than $ 18,000 after flirting with the mid-$ 17,000 during the night hours. The leading cryptocurrency by market cap has only declined further in recent days since MicroStrategy CEO Michael Saylor revealed his company’s plans to offer convertible senior notes to raise $ 650 million in proceeds to buy Bitcoin.
Whales of such size and magnitude rarely announce their position determination plans in advance, making the news remarkable. However, the market has yet to praise such a huge piece of information. There is an early crypto supporter who questions the efficient market theory. Here’s what that means and why the market has yet to respond to information about the sudden, substantial demand.
Bitcoin price falls as corporate treasury publicly announces an increase in position size
The Nasdaq-listed software company MicroStrategy sparked the first wave of business purchases of the very first cryptocurrency. Jack Dorsey’s Square Inc followed soon after, sparking a wave of FOMO in Q4.
The domino effect took Bitcoin from $ 10,000 retesting to a new all-time high in one fell swoop. The $ 10,000 rise only lasted a handful of months, but it put the crypto asset on the radar of major players for the first time.
Related reading | From FOMO to Overbought: Why Bitcoin Is Too Late for a Steep Correction
Since the initial shift in sentiment towards using the asset as a store of value and hedge against inflation triggered the outbreak of a bullish momentum in the first place, why isn’t it Saylor has raised enough money the purchase of another $ 650 million in BTC had little impact?
Bitcoin has only dropped on the news a whale is increasing its position so sizably | Source: BTCUSD on TradingView.com
Why is crypto market pricing not in new demand information when there are supply issues?
$ 650 million in Bitcoin at current prices represents more than 36,000 BTC – a position the size of a whale by crypto standards. The capital is enough to beat the full market cap of any cryptocurrency of rank 39 and below, to put things in perspective.
The fact that the crypto market has yet to price such information, Nic Carter asks “Efficient Market Theory.” According to Wikipedia, efficient market theory, in a nutshell, is the idea that asset prices currently reflect all available information.
But Saylor made his intention to buy such a large sum of Bitcoin a completely public and pre-planned affair, but the price per BTC has since fallen.
Related reading | “Most Profitable Buy Signal” Triggers As Bitcoin Consolidates Under ATH
However, there could be a number of reasons for this. Despite the fact that Bitcoin has real inherent value, its price is mainly determined by speculation and fair market value is extremely difficult to determine.
Essentially because the crypto investor base believes Bitcoin will almost certainly reach prices of $ 100,000 or more next year and beyond, that information was priced well ahead of Saylor’s showing, causing the cryptocurrency’s rally to overheat too quickly.
FOMO created a strong bullish boost because people currently have little idea how to actively price this. This quickly makes sales promotions just as serious. Trends in speculative assets can stretch in either direction.
Another theory is that investors find Saylor’s “all-in” approach to Bitcoin a bit reckless, given the uncertainty that still exists around the asset.
Regulations could soon become a factor, quantum computers are in development that could make the cryptography protecting Bitcoin less secure, and more. In essence, MicroStrategy itself also speculates on Bitcoin, and speculation in the business world is not always the safest and most healthy (micro) strategy.
Featured image from Deposit Photos, Charts from TradingView.com