Bitcoin’s price endured one of the worst sell-offs in its history, at a time in which most analysts claim it’s a safe haven asset. What happened was a combination of factors that saw investors move to U.S. Treasuries and gold.

The cryptocurrency’s price drop wasn’t bad for everyone, as trading platforms and OTC desks saw activity surge amid the sell-off, with some even declaring it’s one of the best weeks they’ve had.

MakerDAO, a leader in the decentralized finance space, is avoiding having to shut down over Ethereum’s price drop by auctioning off MKR tokens.

Top stories in the Crypto Roundup today:

• Why Bitcoin Is Falling Despite Claims That It Was a ‘Safe Haven’ Asset
• Bitcoin’s Price Drop Sees Activity Surge at Crypto OTC Desks
• DeFi Leader MakerDAO Avoids Shutdown Over Ethereum’s Price Drop

At the time of writing, bitcoin (BTC) is trading at $5,481.46 (-25.39%) with a daily Top Tier volume of $10.52. As for ether (ETH), it is trading at $128.57 (-23.42%) with a daily Top Tier volume of $4.12 billion. The MVIS CryptoCompare Digital Assets 10 Index is currently tracking at 1,922.64 (-25.34%)

Why Bitcoin Is Falling Despite Claims That It Was a ‘Safe Haven’ Asset

In a 24-hour period, the price of Bitcoin dropped from over $7,400 to a $4,100 low, before bouncing back to $5,300. The flagship cryptocurrency dropped over 44.5% and its market cap dipped below the $100 billion mark. The rest of the crypto market dropped with it, as the space shed over $50 billion.

Behind the drop are a number of factors. These include the drop in all major U.S. equity indices, which went into bear market territory for the first time in a decade this week. The Dow Jones Industrial average fell by 10%, the most since the Black Monday In 1987. These drops continued even after the Federal Reserve announced a simulative bond-purchase plan.

Moreover, the World Health Organization has declared the COVID-19 a pandemic, and in response to the situation President Donald Trump addressed the people of the United States and revealed a travel ban from Europe to the U.S., which excluded the United Kingdom.

The crypto market sell-off was so aggressive it created very significant arbitrage opportunities, as feeds struggled to keep up. At one point, CryptoCompare data shows that between two major cryptocurrency exchanges - Bitstamp and OKEx – the price difference was of over $500.

The sell-off undermined the investment narrative Bitcoin was started to get that it was a safe-haven asset, similar to gold or U.S. Treasury bonds. The intense sell-off even led to the liquidation of over $700 million in futures contracts and other leveraged positions.

BitMEX co-founder and CEO Arthur Hayes addressed the price drop saying he believes “fear and uncertainty facing humanity is enough to inspire a global margin call." The price, he said, will be pushed further down by “any crypto hedge fund that allows quarterly or less liquidity” as these will be “getting distress calls” and “dumping coins into a falling market.”

Hayes had a positive outlook on the future, however, saying that once central banks cut interest rates to zero and launch “open-ended quantitative easing” BTC could see a “nice run back through $10,000 towards $20,000 by year end.”

Bitcoin’s Price Drop Sees Activity Surge at Crypto OTC Desks

As the price of Bitcoin plummeted and investors moved to safe-haven assets like gold and U.S. T-bills, some in the cryptocurrency space were working hard to keep on making money. A U.K.-based crypto trading firm B2C2 was reportedly beating its record for volume trading, in fact.

Speaking to TheBlock, B2C2 founder Max Boonen revealed that the firm stayed online while working from his living room, pricing orders throughout the market slide to deal as trading volumes surged.

The CEO of crypto exchange LMAX, David Mercer, reportedly noted that this is going to be a record week for the trading platform,  while expressing concern about a global economic downturn that could affect business.

Amid the intense sell-off some exchanges reportedly experience outages, which Genesis Global Trading head Michael Moro noted is par for the course in such a market. He added:

"Given that crypto volatility is basically the norm, quote outages from certain desks is par for the course."

Per Moro, institutional investors are split “60/40” on market sentiment, with the majority being on the selling side.

DeFi Leader MakerDAO Avoids Shutdown Over Ethereum’s Price Drop

The largest project in the decentralized finance (DeFi) space, MakerDAO, is set to auction MKR governance tokens over the next two days, in a move triggered amid freefalling Ethereum prices.

The auction is being made as the platform got to over $4 million in under-collateralized debt, meaning $4 million worth of the DAI stablecoin aren’t backed by an underlying cryptoasset. To avoid having to shut down, Maker will programmatically mint and set the MKR tokens 50,000 DAI increments, to cover the outstanding debt.

In the case of an abrupt market change, Maker automatically sells the collateral used to issue DAI – which can be in ether or BAT – to minimize the damages. The ETH sell-off was so intense, however, an automated auction could not trigger.

Ryan Berckmans, an Ethereum develop, wrote regarding the situation:

“An emergency shutdown (not happening now) would cause DAI holders to take a haircut, whereas the social contract of MakerDAO is that MKR tokens take a haircut in the event of system failure. Therefore we should try and ensure that MKR holders take a hair cut by avoiding emergency shutdown if possible.”

Berckmans added he heard an emergency shutdown “is not being considered as an immediate option.” On the call it was noted, however, that if ether’s price keeps dropping the shutdown may be considered. CryptoCompare data shows ETH dropped from $170 to $127 in 24 hours.

Flipside Friday

The Flipside Crypto Disparity Ratio is a tool helping you find out which cryptoassets are under and overvalued. The crypto disparity ratio scores cryptoassets based on market capitalization and FCAS ratings, with a score over 1 showing it’s undervalued, and under 1 showing it’s overvalued.

XYO, an ERC-20 token used for a decentralized network of devices that anonymously collects geospatial data, tops the undervalued list with a score of 1.70. It’s followed by the Raiden Network (RDN), an off-chain scaling payment solution to perform ERC20 compliant token transactions, at 1.33.

It’s followed by Polymath (POLY), a blockchain-based system to coordinate and incentivize participants to collaborate and launch financial products on the blockchain. BURST, a cryptocurrency using a proof-of-hdd capacity (POC) mining algorithm, comes next.

On the overvalued side we have Qubitica (QBIT), a community of over 1,000 developers, IT companies and investors working to advance blockchain technology. Its community is working on blockchain and AI projects, and the QBIT token represents participation shared in Qubitica and related projects. Qubitica’s value ratio is 0.36.

QBIT is followed by the DxChain Token (DX), the world’s first decentralized big data and machine learning network powered by a computing-centric blockchain. Next to it comes Monacoin, the once-popular cat meme cryptocurrency which has even been used to buy land in 2014, comes in third at 0.39.

Behind it is Crypterium (CRPT), a cryptobank platform leveraging the Ethereum blockchain to provide an instant processing engine for both fiat and crypto transactions at 0.43.

State of the Crypto by Top Tier Exchange Volume

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