Is A Chinese Wallet Ponzi Scheme to Blame?
August has been a relatively good month for Bitcoin. On the 1st of August, Bitcoin was trading at just above $10,000 per coin. For the majority of the month, Bitcoin was ranging somewhere between highs of $12,000 to $10,000. As always, there have been several different theories as to why Bitcoin was maintaining its value. Some have brought up tensions between Hong Kong and China as a possible culprit for Bitcoin's price. For the first time this month, Bitcoin broke below $10,000. It is currently trading at $9,950.
It is important to note that in July, Bitcoin fell below $10,000 roughly 3 times only for it to recover. Currently it seems possibly that this is a temporary dip and not a negative trend. We could possibly see the drops continue to $9500 and possibly $9000 should the drop continue. Bitcoin dominance remains high at 68% and altcoins are still mostly struggling against Bitcoin and fiat currencies. Currently the Bitcoin Fear - Greed index has its dial pointing heavily towards fear. Negative public sentiment could lead to further dips.
Chinese Wallet Ponzi Schemers
When Bitcoin drops or rises everyone looks for a fundamental reason for the movement. In this case, the reason might again have come from China. As tweeted by crypto influencer Dovey Wan, a major Bitcoin scam has occurred in China.
Reasons why exchanges are not patting attention to the 200K $BTC scam PlusToken— Dovey Wan 🗝 🦖 (@DoveyWan) August 14, 2019
1. It’s not known outside 🇨🇳 (maybe 🇰🇷)
2. Chinese exchanges didn’t do anything as it’s “closed” by police
3. Chinese police didnt work with exchanges as crypto exchanges are not legal in 🇨🇳
Apparently, a popular Chinese wallet PlusToken has stolen all of their client's funds. In a similar style to well-known crypto scam Bitconnect, Plus token promised high returns to users that stored funds in their wallet. PlusToken claimed that these returns are part of a complicated trading algorithm that generated guaranteed returns. Also like Bitconnect, PlusToken didn't really elaborate how it worked.
The theft was evaluated at roughly 200,000 Bitcoin. Both Bitcoin and Ethereum were the main currencies stolen. The development team of PlusToken will likely face legal action in China, but it is unlikely that any funds will be recovered.
It isn't likely that the PlusToken wallet scandal will have lasting effect on Bitcoin. Though if more large scandals erupt, we could see Bitcoin below $10,000 for a few months.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado