Bitcoin price analysis: The bottom is still well below as PlusToken scam continues selling stolen coins

BTC/USD has resumed the decline after a period of consolidation. It seems to be a tradition to stay idle in Asia and Europe and sell Bitcoin ahead of the US opening. At the time of writing,  BTC/ISD is changing hands at $6,470 with the downside momentum gaining traction on the breakthrough below $6,600. The first digital asset has lost over 5% on a day-to-day basis and retested the Asian low. 

Meanwhile, the experts from  Chainalysis believe that this is a natural development under the current circumstances.  

Chainalysis is a blockchain company that provides reliable cryptocurrency-related data to helps government agencies, businesses, and financial institutions engage with the industry.

PlusToken to blame

The team lays the blame on the alleged PlusToken Ponzi.  Chinese authorities chased the founders of the scheme to Vanuatu, where they were arrested and deported to China. Beijing investigators believe that the company operated a Ponzi scheme and scammed thousands of people. The money from new investors was used as payouts for those who came earlier, which is the most apparent feature of a traditional pyramid scheme.

Chainalysis tracked down $2 billion in digital assets taken from victims. Now the experts claim that the founders of the pyramid started to cash out their loot. Massive sales might have served as an initial trigger of the large-scale collapse on the cryptocurrency market; however, the worst is not over yet as the criminals continue shedding their assets. It means that the bearish pressure may increase in the nearest future. 

The PlusToken team may be using cryptocurrency mixers to cover-up their tracks and make it more difficult to trace the beneficiaries of the transactions they are making.  Chainalysis claims that they have been liquidating their coins via OTC desks through Huobi. 

However, the scammers failed to do the mixing properly, allowing the data experts to trace them. According to Kim Grauer, the Senior Analyst at Chainalysis, they used self-mixers and Wasabi wallet.

The sell-off is not over

According to the research, PlusToken top-managers have already sold 25, 000 BTC (about $2 million); however, they still hold about 20,000 distributed across 8,700 addresses. As the company received investments in ETH and some other coins, their current activity affects the broader market, not only Bitcoin. 

While it is impossible to say for sure whether   PlusToken was behind the sell-off, or some other factors were at play, Grauer urges traders to consider this fact when making investment decisions. 

“Unfortunately, because it’s not possible to distinguish between trades made by OTC brokers in possession of PlusToken funds and all other trades made on Huobi, we can’t say for sure that PlusToken cashouts caused Bitcoin’s price to drop. However, we can say that those cashouts cause increased volatility in Bitcoin’s price and that they correlate significantly with Bitcoin price drops,” the team wrote on the blog post.

BTC/USD: technical picture

Bitcoin is moving within a steep downside trend with both intraday and daily RSI (Relative Strength Index) pointing downwards. It means that the bears are not exhausted as of yet, and the sell-off may continue towards the end of the day. 

BTC/USD broke below $6,800 that served as local support and extended the decline towards the next barrier created by November low on approach to $6,500. The following support comes at $6,300 (the lower line of the weekly Bollinger Band) and $6,000. 

BTC/USD daily chart