Bitcoin Whales Are Pulling The Rug Out From Under Market As BTC Wavers At $19,000 — What Next?
After seesawing just under $20,000 during the long US, on Tuesday, Labour Day weekend, Bitcoin fell below $19,000 as investors intensified their risk-off activities.
By Wednesday noon, the world’s largest cryptocurrency by market capitalisation was trading around $18,800 after posting a 5.74% loss in the past 48 hours.
On the other hand, despite attempting to recover early Tuesday, Ethereum plunged along with Bitcoin and was trading at $1,521 after an 8% drop, with enthusiasm around the upcoming merge seemingly fizzling. Top Crypto assets such as XRP, ADA, SOL, DOGE, DOT and MATIC also trim gains, with the global crypto market cap plunging by 5.61% in the process to sit at $969.60B.
Why Bitcoin plunged
Bitcoin’s drop below the $19,500 psychological support has been attributed to the ongoing macroeconomic concerns, including ballooning inflation and the Fed’s determination to keep pushing rates higher.
“Bitcoin is an asset that requires risk sentiment, influence and people to be aggressive on risk-taking. Powell is telling us that we shouldn’t be aggressive in risk-taking. He wants economic activity to slow down, he says there’s going got be pain in the private sector, and monetary policy is going to remain tight …this is not the environment to be cyclically bullish,” said Alfonso Peccatiello, Author of The Macro Compass. “I think that Bitcoin will try and go to $16,000 or below between now and the end of the year.”
On-chain data from crypto analysis firm Glassnode has also shown that whales have been a major force behind the recent dump, with a significant number of entities holding over 10,000 BTC selling their coins since August 15th.
“The cohort of most interests in the current market are the Whales (10k+ BTC) who have begun to aggressively distribute coins into the range highs of $24500, capitalizing on any exit liquidity present amidst global market uncertainty.” Glassnode wrote in this week’s newsletter. According to the firm, the excess supply provided to the Market by the Whales appears to have overwhelmed the already eroded demand side.
The Ebbing Tide
Nevertheless, hodlers have been scooping the coins being distributed by whales at every available discount. The Liveliness metric, a tool used to assess the state of bitcoin’s long-term behaviour, shows that coins accumulate much faster than sold and coincided with a HODLing dominant regime.
Short-term holders have mainly been active, becoming the primary proponent of day-to-day acquisitions within the current price range, despite most of them holding unrealised losses. With this unwavering conviction, experts believe the market will likely find a soft landing culminating in recovery, given that this cycle’s market participants are more emboldened than other crypto winters.