Perhaps Bitcoin price drops are not from PlusToken cashouts, but rather a coincidence

Fraudulent projects with the cover of cryptocurrency, market manipulation is one of the reasons people are more afraid to mention crypto. Unusual price increases and decreases come from pump and dump cases as well as frauds and money laundering projects. And according to Blockchain research firm Chainalysis, the PlusToken scam is one of the `leading causes of the recent high volatility of Bitcoin prices. However, it is also possible that this is just a coincidence.

Plustoken scammers contributed to the Bitcoin downturn?

By tracking the activity of funds on multiple Blockchains, Chainalysis has identified the liquidation of PlusToken scammers’ money in connection with the recent Bitcoin price downtrend.

However, against Chainalysis’s report, rival Blockchain detectives CipherTrace argued that PlusToken’s move has absolutely nothing to do with selling Bitcoin.

Bitcoin’s price reached its highest level in June 2019 of nearly $ 14,000 just days after Chinese authorities arrested many suspects on Vanuatu island on suspicion of operating a Ponzi called PlusToken. As AZCoinNews reported, PlusToken promised interest rates as high as 600%, revolving around a token listed on some Chinese exchanges and reaching the highest price of $ 350.

Until it was uncovered, PlusToken scammed over $ 2 billion in cryptocurrencies, accounting for about one percent of the entire cryptocurrency market cap at that time. After that, the Bitcoin price fell into a downtrend, and the cause is said to be regular scammers selling stolen Bitcoin.

In August 2019, crypto security firm PeckShield released a report confirming fraudulent funds were flowing mainly into Bittrex and Huobi. However, they did not provide any further details.

According to Chainalysis, a total of 25,000 Bitcoin has been cashed out by scammers. Through money traceability mechanisms, Chainalysis has found most of the funds have ended in the hands of independent OTC brokers operating on the Huobi.

To link this cash flow to price action, Chainalysis said:

“Based on the relationship between the volume on the chain, the amount of Bitcoin transferred from the scammer’s wallet to the wallet identified on Huobi and the Bitcoin volume transaction for Tether was traded on Huobi. The chain is followed by an increase in transaction volume, when OTC traders receive Bitcoin from the PlusToken wallet and then exchange it for Tether, causing the price to drop when Bitcoin is traded in the market by OTC traders.”


Source: Chainalysis

On September 20, 2019, when PlusToken scammers traded $ 34 million worth of Bitcoin with Huobi OTC traders, shortly after that, the Bitcoin price began to decline from just over $ 10,000 to about $ 8,000. And it is worth mentioning that this price action occurs exceptionally quickly, only in the period from 24 to 26 September.

Maybe the decrease in price is just a coincidence

Despite giving evidence based on Bitcoin price history over the past months. However, Chainalysis acknowledges the results to show a correlation, not a causal relationship.

The report stated:

“We cannot say with certainty that PlusToken causes the price decrease of Bitcoin. The decrease in price may be due to coincidence.”

By examining the volume on the chain compared to the trading volume and performing additional regression analysis, Chainalysis concluded that although payments are strongly correlated with increased volatility, it is not possible to rule out water droplets caused by something else.

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