Why Bitcoin Plummeted After the Arrest of Telegram Founder

Bitcoin Falls Below $60,000
Telegram-Linked Coins Also Plunge
"The Most Used Platform in the Cryptocurrency Market"

[Image source=Reuters Yonhap News]

Following the arrest of Pavel Durov, the founder and CEO of Telegram, major cryptocurrencies including Bitcoin have continued to plunge. Bitcoin temporarily fell below the $60,000 mark again, and cryptocurrencies linked to Telegram have also shown weak performance. The reason the cryptocurrency market took a direct hit from Durov's arrest is that, given the market's emphasis on security and privacy, a significant portion of investors were Telegram users, and the dependence on Telegram was high, with about ten different cryptocurrencies created using Telegram.

Experts say that after Durov's arrest, the volatility of major cryptocurrencies will increase depending on Telegram's business direction, but with medium- to long-term positive factors such as the increased possibility of a U.S. interest rate cut in September, price recovery is also expected.

Bitcoin Falls Below $60,000... Durov's Arrest Acts as Major Negative Factor

According to Binance, the world's largest cryptocurrency exchange, on the 28th, Bitcoin's price dropped 5.84% from the previous day to $59,313.14, breaking below the $60,000 level again. Bitcoin prices briefly fell below $50,000 during the global stock market crash on the 5th of this month, known as "Black Monday," but showed signs of recovery by reaching $64,453.59 on the 24th, the day Durov was arrested, before declining again. In the case of Toncoin, a cryptocurrency issued by Telegram itself, the price fell more than 20% on the 25th, the day after Durov's arrest, trading in the low $5 range.

Concerns that Durov's arrest by French authorities could diminish Telegram's strengths such as high security and privacy have acted as a major negative factor, leading to the decline in coins. The New York Times (NYT), citing cryptocurrency market experts, reported, "It is hard to imagine cryptocurrency investors without Telegram, which is the most widely used messaging platform in the cryptocurrency market," adding, "There are as many as 15 coins and cryptocurrency assets linked to Telegram."

The cryptocurrency and IT industries are demanding Durov's release from French authorities. The French government arrested Durov on the grounds that he did nothing to prevent various criminal activities on Telegram, such as sexual crimes, cyberbullying, and drug trafficking, but it is argued that holding only the platform operator fully responsible is not appropriate.

Paolo Ardoino, CEO of Tether (USDT), said, "It is very concerning that Durov, who guaranteed freedom of the press through Telegram, was arrested. If our society loses the fight to protect freedom of the press, a dark era will come." Elon Musk, CEO of Tesla, also strongly criticized, saying, "By 2030 in Europe, people might be punished just for liking a meme."

Expectations for a Turnaround After U.S. Interest Rate Cut Event in September

[Image source=Reuters Yonhap News]

Some predict that although the cryptocurrency market will be shaken in the short term due to the negative impact of Durov's arrest, positive factors such as a U.S. interest rate cut in September are on the horizon, so a rebound is possible in the medium to long term.

An anonymous cryptocurrency analyst, Altcoin Sherpa, stated on his X account, "Following the U.S. Federal Reserve's indication of a possible rate cut, the supply overhang (pending sell orders) is expected to stabilize after the third quarter," emphasizing, "Bitcoin will show strength again, and since it has tested resistance around the $71,000 level many times, it is highly likely to eventually break through that resistance."

The overall investment sentiment in the cryptocurrency market remains neutral, with a wait-and-see stance. On the 27th, the 'Fear and Greed Index' compiled by global crypto data research firm Alternative recorded a score of 48, indicating a 'Neutral' level. The index ranges from 0, indicating extreme fear, to 100, indicating extreme greed.