In the past 24 hours, the crypto market dropped $8 billion as major digital assets including Bitcoin, Ether, and Bitcoin Cash recorded losses in the range of two to five percent. Bitcoin Cash and Stellar recorded the largest losses amongst the top ten cryptocurrencies, while Ripple and EOS remained relatively stable with a one percent gain. What is Triggering the Fall? On July 27, analysts attributed the fall in the price of Bitcoin to the rejection of the Winklevoss Bitcoin exchange-traded fund (ETF). However, throughout the past three days, since August 1 to 3, analysts and traders have not been able to provide a specific reason to justify the fall in the value of major cryptocurrencies. It is possible, as Tabb Group reported, that the over-the-counter (OTC) market of Bitcoin is two to three times larger than the exchange market of the dominant cryptocurrencies and large sell orders have impacted the market over the past month, driving up volatility. Hence, the fall in the price of Bitcoin, which was mostly attributed to the rejection of the Winklevoss Bitcoin ETF, may have had very little to do with the ETF proposal but rather reflective of the OTC market in which major investors and whales trade. Overall, the cryptocurrency market has not demonstrated any sign of recovery over the past 72 hours. Historically, after a day or two of correction and intense downward trend, the crypto market tended to record spikes of volume and price, initiating a short-term corrective rally. However, this week, the market has consistently shown low volume and demand, decreasing the probability of a trend reversal in the short-term. As of August 3, the volume of Tether (USDT), a stablecoin whose value is hedged to that of the US dollar, is $2.8 billion, 55 percent higher than the volume of Ether, the second largest cryptocurrency in the market by valuation behind Bitcoin. An increase in the volume of Tether and a drop in the volume of major digital assets portray the lack of confidence of investors in the crypto market, especially in the extreme rate of volatility the market has demonstrated since late July. OKEx Situation is Worsening the MarketEarlier today, OKEx, the third biggest cryptocurrency exchange behind Binance and Huobi Pro, has publicly stated that it triggered its “societal loss risk management mechanism,” after it failed to liquidate a large long contract on its futures market. Simply put, the activation of the “societal loss risk management mechanism” means existing investors on OKEx bailing out the exchange with their profits because the exchange could not liquidate or execute the long contract with the company’s funds. Several analysts criticized the inability of OKEx to liquidate contracts on its platform with corporate funds and its controversial societal loss management system that forces investors to use their profits to cover the exchange’s losses, which hasn’t occurred on other exchanges that offer margin trading such as BitMEX. While the OKEx liquidation issue will not have an impact on the valuation of cryptocurrencies, it intensified uncertainty in the market in a highly volatile period. Featured image from Shutterstock