Massive Drop of Bitcoin Might Be Unrelated to ETF and SEC

On Aug. 8, Bitcoin recorded a massive drop from $7,200 to $6,150, a 14 percent drop within a 24-hour period.

Bitcoin and the rest of the cryptocurrency market recorded one of the steepest falls in recent months as the market lost $50 billion of its valuation within a seven-day period.

The fall of Bitcoin-which seems to have caused the rest of the market to fall by a large margin-coincided with the release of the SEC's decision, leading the public to believe that the delay in the approval of the VanEck Bitcoin ETF caused the price of the dominant cryptocurrency to plummet.

In the cryptocurrency sector, many investors and traders tend to confuse coincidence with causation, often attempting to justify every price movement of Bitcoin and other major cryptocurrencies through news and events.

In reality, both positive and negative developments in the cryptocurrency sector have minimal impact on price trends, and due to the sheer size of the over-the-counter market, which researchers at Tabb Group claimed to be two to three times larger than the cryptocurrency exchange market, it is highly unlikely for minor developments to affect the value of digital assets.

If developments in the cryptocurrency sector supposedly have such a profound impact on the value of cryptocurrencies, the announcement by the New York Stock Exchange, Starbucks and Microsoft to establish a cryptocurrency exchange should have led the crypto market to surge in value, given that some analysts have argued that the NYSE, Starbucks and Microsoft's collaborative effort to be the biggest development in the history of the sector.

People love answers, and by justifying the price movement of digital assets with plausible reasons and actual developments in crypto, investors feel more confident in the market.

As for the recent drop in the valuation of the cryptocurrency market, a variety of factors may have caused it.

Many believe the drop was caused by a large sell-off by whales in the OTC market, while others believe it to be the strengthening hand of the bears who have been looking for an opportunity to dump a large chunk of Bitcoin and Ether into the market.

An influx of institutional investors through trusted custodian solutions could create a pathway for billions of dollars in new capital, allowing the market to recover.