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Despite Scandals and Issues, Bitcoin Rallies – Are Bitcoin Whales and Bitcoin Maximalists the Explan

Bitcoin has had a difficult year but seems to be ending 2022 on a positive note. Are whales and maximalists the reason why? Find out here.

The world of bitcoin and cryptocurrency can seem confusing and highly technical to the layman. It’s full of industry jargon and complex terminology that make it appear impenetrable and reserved for only the most technologically astute.

However, it’s actually simpler to understand than you might expect. All it takes is a degree of research and learning to get your head around some of the more complicated ideas. Like all markets, bitcoin goes through periods of highs and lows, determined by a range of both internal and external factors. After a difficult year, a glance at a bitcoin price chart would reveal that the cryptocurrency is actually performing better than expected. Why is this? Are bitcoin whales and maximalists the reason? Let’s find out.

How has Bitcoin Performed in 2022?

Since the beginning of 2020, bitcoin has been on an incredible run, culminating in an all-time high value of $68,991 recorded in December 2021. This performance came in the face of widespread economic hardship and instability brought about by global events such as the pandemic and worked to suggest that bitcoin and the crypto industry could prove to be impervious to external influence.

However, these lofty dreams were short-lived. Bitcoin’s value began to fall within the next month, and soon careered into a steep downward trend that continued throughout 2022. The coin finished the year with a value at around $16,850, a far cry from the highs seen just 12 months ago.

Why has Bitcoin’s Price Fallen?

Bitcoin’s struggles can be seen as reflective of the wider stock market as a whole. Economic instability such as rising inflation and energy bills have been catastrophic for global markets, increasing the costs for company borrowing and resulting in investors taking less risks. For a sector already regarded as high-risk, this has hit many cryptocurrencies hard and seen a significant loss of investment.

However, just last month the crypto industry was rocked by a scandal that many experts predicted could prove to be the death knell for a number of digital assets, bitcoin included. Crypto exchange and hedge fund FTX collapsed in November, filing for bankruptcy shortly after as it faced what it described as a ‘liquidity crisis’. The platform was then hacked, with hundreds of millions of digital assets stolen by cybercriminals.

In the latest update to the scandal, FTX founder Sam Bankman-Fried had a series of charges brought against him by the US Attorney’s office, including fraud, conspiracy to commit money laundering, and conspiracy to defraud the US.

This represented the biggest scandal ever seen in the crypto industry, and many predicted it would only work to fan the flames of an already struggling sector.

Bitcoin Rallies

Despite a year in which its value plummeted, and a scandal involving one of crypto’s biggest exchanges, bitcoin surprised everybody by rallying in face of these difficulties. While the coin’s price has indeed fallen significantly since the turn of the year, it actually saw a 10% upturn since the news about FTX broke, precisely the opposite of how many expected it to react.

Other than the other major cryptocoin Ethereum, other digital assets haven’t recovered after the hammer blow of the FTX scandal. Bitcoin whales and maximalists have been touted as the reason behind the coin’s surprising resilience. Let’s look at these in more detail and ask if they are really responsible for the coin’s rally.

What are Whales and Maximalists?

A bitcoin whale, or a crypto whale for that matter, is someone who holds large volumes of bitcoin or another particular digital asset. They hold so much that they can influence market performance and fluctuations. When looking at bitcoin, whales account for a large portion of the total amount of coins on the market, with the top 100 wallets holding more than 15% of the available currency. Whales selling off their holdings could be one of the reasons behind the recent bitcoin uptick as this would work to inflate the asset’s value.

Bitcoin maximalists are more ideological in nature. They believe that bitcoin and the associated blockchain technology will be the only payment needed, and indeed the only payment system used in the future. Bitcoin and blockchain have a range of advantages over traditional payment systems, such as low cost, faster speeds, and improved security, which certainly suggest that, in theory, they could be the payment systems for the future.

Bitcoin maximalists are so committed to the coin that they will continue to invest in and support it even during times of hardship. By continuing to pump money into the asset, bitcoin may have rallied in face of recent difficulties thanks to the efforts of the bitcoin maximalists.

Conclusion

Global markets are notoriously unpredictable, especially so when we’re dealing with the often highly volatile cryptocurrency industry. Coin prices rise and fall without warning in the face of changing market conditions, or often for no discernible reason at all. The bitcoin whales and maximalists could well be the reason behind the coin’s recent rally, but the true reason is likely far more complex and multi-faceted.

Image source: Unsplash 

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