- Bitcoin and Ethereum’s price rally may not be driven by general adoption, but by the investment of a group or fund.
- The CEO of Alameda Research predicts a sharp correction in the price of the top cryptocurrencies.
Alameda Research CEO Sam Bankman-Fried said in an interview with Venture Coinist that he is suspicious of the rally for Bitcoin and Ethereum since the start of january. At the beginning of 2020 and until the last few days, the crypto market seemed to have entered an unstoppable bullish movement. But it experienced sudden crashes and within an hour, the BTC price fell around $1,000 to $9,290.
For traders familiar with the crypto market, the behavior observed during this period is not unusual. However, Bankman-Fried called it “weird”. In the interview he said that the rally seemed not to be caused by natural investments. He also feels suspicious about the current state of the market.
Is Bitcoin and Ethereum facing a major correction?
The CEO of Alameda Research made a comparison between the feeling he had during the bull market of and now. In 2017 Bitcoin hit its all-time high when BTC reached $20,000. At that time, Bankman believes there was a sense of mass adoption:
(…) you just sort of had this feeling that you walked out on the street and you run into someone, and they’re probably thinking about buying Ethereum for the first time. That’s sort of the sense you got then, and this doesn’t feel like that. This is not [a]mass new consumer base flocking in (…).
Furthermore, Bankman thinks that enthusiasm in the crypto market has not risen. He further states, that if the behavior in the prices of the top cryptocurrencies occurred in “normal markets” he would feel that there is privileged information influencing them:
(…)I don’t know what’s going on but maybe other people know something I don’t. Maybe there’s some really great news coming out. Maybe there’s a groundswell of enthusiasm from some sector or group or fund that we don’t know about, or just a big buyer is sort of the other thing, like someone is just buying a lot, and it’s going up. And that makes you wonder. What are they doing? I don’t know. It’s all kind of weird and confusing (…)
Bankman expressed concern that the rally in recent months may have been caused by a group or fund or an entity that decided to invest in cryptocurrencies. The CEO of Alameda Research said the market could see a big correction if this entity decides to dump its BTCs. Therefore, he warned that it is necessary to be cautious and expect a major drop in prices:
There were definitely signs that markets were overheated when we got to $20,000 Bitcoin, but there was also these signs that there was a ton of really organic enthusiasm. Right now, I’m sort of less sure of that, so I gotta say I’m feeling a little nervous. I’m not necessarily saying things are going to go down, but it wouldn’t shock me if they did.
By contrast, Fundstrat research firm co-founder Thomas Lee said he is convinced that BTC will reach $40,000. Lee believes that the U.S. elections, geopolitical tensions and the Coronavirus epidemic will cause a new rally. The Bitcoin halving is also an important factor and Lee believes that after this event, the price of Bitcoin will go up.
At the time of publication BTC trades at $9,766 with slight gains of 1.37% in the last 24 hours. On the other hand, the price of Ethereum trades at $266 with profits of 3.01% in the last 24 hours. Below you can watch the full interview with Sam Bankman-Fried: