Bitcoin whales dump $59 billion in cryptocurrency market, impacting crypto prices
Bitcoin, the original cryptocurrency, has been experiencing a significant decline, dropping more than 20 percent from its record high reached a month ago. On October 4, Bitcoin fell as much as 7.4 percent, dipping below the US$100,000 mark for the first time since June. This downward trend has left the market in a state of uncertainty.
Unlike previous crashes triggered by leverage, the current slide in Bitcoin’s value has been primarily driven by a steady stream of selling in the spot market. Long-time Bitcoin holders have been offloading approximately 400,000 Bitcoin over the past month, amounting to an exodus of around US$45 billion, leading to an unbalanced market. In contrast to the massive liquidations that characterized the October crash, the recent sell-off has been more gradual.
Despite Bitcoin’s losses, the liquidations in the market are relatively modest, totaling around US$2 billion over the past 24 hours. This is notably lower compared to the US$19 billion in forced unwindings during the October crash. Open interest in Bitcoin futures is currently subdued, with options traders betting on downside movements through put contracts aimed at the US$80,000 level.
The shift in market dynamics from forced liquidations to long-time holders selling off their assets points to a changing sentiment among investors. Market analysts suggest that conviction among long-time holders is eroding, leading to a growing imbalance between sellers and new buyers. Entities with large holdings, known as “mega whales,” have been offloading significant volumes of Bitcoin, contributing to market volatility. This trend has caused a decline in accumulation by parties holding between 100 and 1,000 Bitcoin.
Looking ahead, analysts warn that this downward trend in Bitcoin’s value could persist well into the next year. During the 2021–2022 bear market, over one million Bitcoin were sold by large holders over the course of almost a year. This long-term selling pressure may continue, potentially leading to further declines in Bitcoin’s price. Although a catastrophic plunge is not anticipated, analysts predict that Bitcoin could consolidate and drift lower, with a downside target of $85,000.
In conclusion, the current state of the cryptocurrency market, particularly Bitcoin, is characterized by a significant shift in sentiment and market dynamics. The gradual sell-off by long-time holders and the lack of substantial buying from new investors are reshaping the market landscape, leading to increased uncertainty and potential further declines in Bitcoin’s value. Analysts warn that this trend could persist for an extended period, potentially lasting well into the coming year.
