Despite a brief dip below ,000 on June 23, bitcoin has demonstrated formidable resilience by closing above this pivotal level for 118 days in 2024. According to QCP Capital, the cryptocurrency continues to hold strong against various market pressures, including substantial governmental sell-offs. QCP Capital Foresees Bitcoin Holding K Line, Despite Recent Market Pressures In […]
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‘Crypto Winter’ Arrives Early For The Altcoin Market As Venture Capital, Founder Selloffs Mount
The altcoin market is experiencing an early “crypto winter” as initial investors and founders of various projects sell off their tokens.
According to a recent Bloomberg report, this decline can be attributed to a combination of factors, including the unlocking of tokens held by venture capitalists (VCs) and founders, as well as the selling pressure caused by the correlation between altcoins and major network tokens.
Altcoin Market Hit By Token Unlock Wave
As the crypto market recovered from the prolonged decline of two years ago, many projects’ tokens have reached their unlock dates this year. Per the report, venture capitalists and founders who received these tokens in exchange for investments or work contributions now have the opportunity to sell them.
Out of the 138 tokens tracked by researcher TokenUnlocks, 120 have scheduled for this year, with a combined market value of approximately billion.
This anticipated selling from unlocking VCs has led to downside price reflexivity as non-VC holders attempt to front-run the selling pressure, often resulting in steep discounts to spot prices.
The price performance of altcoins such as DYDX, Avalanche (AVAX), and Pyth (PYTH) has been significantly impacted by token unlocks. DYDX’s token price has more than cut in half since mid-March, while AVAX and PYTH have also seen significant declines. These three tokens had unlocks scheduled for May, adding to the selling pressure.
Token unlocks, which had previously helped drive 2023 prices, are now receiving more attention from both VCs and public participants, prioritizing short-term profits over long-term holdings for altcoins with unlocks.
Liquidity Crisis?
Notably, since March 14, when Bitcoin (BTC) reached an all-time high of ,700, only 12 out of the top 90 non-stablecoin assets tracked on centralized exchanges (CEXs) have posted positive returns, while 81 have recorded negative returns, according to the report.
Bitcoin has dropped around 12% since its peak, and most of the top 100 tokens have declined by more than 25%.
The smaller altcoins, including those correlated with major network tokens like Ethereum (ETH) and Solana (SOL), tend to be sold off first when there is a decline. The unlocking of tokens exacerbates this selling pressure, further impacting the altcoin market.
According to Bloomberg, the current market presents challenges for infrastructure projects funded during the bear market phase.
While these projects launch their tokens, there is limited demand from “regular buyers” at high prices. The altcoin market is currently characterized by a lack of liquidity and a surplus of tokens being unlocked, leading to downward pressure on prices.
Featured image from DALL-E, chart from TradingView.com
Bitcoin Hits $52,000 High: Are These Giant Sell-Offs About To Crash The Crypto Party?
According to a recent report from Spot On Chain, Bitcoin might be on the edge of a notable plunge. So far, the flagship cryptocurrency has recently broken through the ,000 mark and traded above it for the first time since December 2021.
However, Spot On Chain reveals that Bitcoin faces potential challenges that could affect its immediate market performance. Two significant sell-off events loom on the horizon, potentially influencing Bitcoin’s price dynamics in the short term.
These developments have sparked speculation, prompting a closer examination of their possible impacts on the cryptocurrency market.
Major Bitcoin Sell-Off Events On The Horizon
The first of these events involves Genesis, a prominent crypto asset manager authorized to offload a significant portion of its Grayscale Bitcoin Trust (GBTC) shares. The second event is marked by the US government’s announcement to sell some of its Bitcoin holdings acquired from the Silk Road platform.
Genesis has received approval to sell 35 million GBTC shares, estimated to be worth around .3 billion. This occurrence mirrors an earlier liquidation event involving FTX, which notably impacted Bitcoin’s market price, illustrating the potential volatility such moves can introduce.
It is worth noting that the upcoming Genesis sell-off represents a significant moment for Bitcoin, as it tests the resilience of its recent price gains against the backdrop of large-scale disposals.
The #Bitcoin price has been on the rise for the past 7 days and finally broke the K mark again after 2 years!
However, there are two impending big threats to the short-term $BTC price. Can it overcome?
1. #Genesis was approved to sell 35M Grayscale Bitcoin Trust shares… pic.twitter.com/Qn7wbQXaDa
— Spot On Chain (@spotonchain) February 15, 2024
The US government’s decision to auction off 2,875 BTC, valued at 0.6 million, adds to the market’s cautious outlook. With the government holding one of the largest Bitcoin reserves globally, its actions have a marked influence on market perceptions and the cryptocurrency’s price stability.
Spot On Chain highlighted historical instances, such as the sale of 8.2K BTC through Coinbase, which have shown that government sell-offs can temporarily lead to fluctuations in Bitcoin’s price.
Optimism Amid Uncertainty
Despite these concerns, certain segments of the crypto community view these events as minor hurdles in the broader trajectory of Bitcoin’s growth.
Non event… ETFs buying in 300-500m a day lol
— Cryptamurai
I County Capital (@cryptamurai) February 15, 2024
Notably, the increasing involvement of Bitcoin spot exchange-traded funds (ETFs) in the Bitcoin market suggests a growing institutional interest that could offset the effects of the sell-offs.
CryptoQuant has recently highlighted that roughly 75% of new investments into Bitcoin are coming from spot ETFs. This is quite evident as BitMex research reported that the Bitcoin spot ETF market saw an inflow of over 0 million yesterday.
Bitcoin Spot ETF Flow – 14th Feb 2024
All data in. Another strong day, with +0m net flow for all the Bitcoin ETFs pic.twitter.com/xy7t1hGhyw
— BitMEX Research (@BitMEXResearch) February 15, 2024
Featured image from Unsplash, Chart from TradingView
Bearish Signal: Why Bitcoin Miner Sell-Offs May Continue
Bitcoin miners have borne the brunt of the bear trend since it began. They watched cash flow plummet on their machines, forcing them to look to other ways to finance their operations. The natural response to this was for public miners to dip into their bitcoin reserves and begin selling off BTC to keep their operations going. For a time, it seemed miners would stop selling due to the recovery in price, but this is proving not to be the case.
Miners Offload More BTC
Bitcoin miners had sold off more bitcoin than they had mined for the first time in May. The same trend then continued into June, when miners had sold thousands of BTC to cover operational and other costs. It seems this trend did not end in the month of June either, as the miners continued to sell off coins.
Data shows that bitcoin miners had actually sold 5,700 BTC in the month of July alone, the largest sale so far. These bitcoin miners had once again sold more BTC than they had actually produced. In total, it was reported that 3,470 BTC was produced for the month, meaning they sold 50% more bitcoin than they mined.
These bitcoin miners had sold more during a month when some had to shut off operations due to rising temperatures. However, one of those miners had been able to turn it around by making more money from selling energy credits to the Texas government than they would mining. The largest sellers were ousted to be CoreScientific with 1,970 BTC and BitFarms with 1,600 BTC.
BTC recovers above ,000 | Source: BTCUSD on TradingView.com
Bear Trend For Bitcoin
Bitcoin miners are often among the largest whales in the market. This means that whatever actions they take in regards to their portfolios can often have an impact on the market. It is evident when miners are not forced to sell their BTC that the price of the digital asset continues to rise, and the reverse is the case when they dump their coins.
The sell-offs have all come due to the reduced revenue realized on a daily basis, and with no significant rise in miner revenues, it is expected that miners are going to have to keep selling. Daily miner revenues for the last week were muted with only a 1.58% growth, seeing them bring in .89 million.
If there is to be any reversal in this selling trend, bitcoin miners would have to see more cash flow from their mining activities. However, as the price remains low, these miners are realizing less, dollar-wise, compared to a few months ago, while expenses such as electricity and machines remain the same or even higher in some cases.
Featured image from Analytics Insight, chart from TradingView.com
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Bitcoin Miner Revenues Continue To Grow, Will This Put A Stop To The Sell-Offs?
Bitcoin miner revenues have been a hot topic of discussion in the last three months. It mainly follows the decline in cash flow of mining machines due to the drop in the price of BTC, and that has adversely affected the revenues of bitcoin miners, seeing them drop to yearly lows. However, as the market has recovered some of its lost value, bitcoin miners are starting to fare better in terms of revenues, which could be the plug to the recent sell-offs.
Miner Revenues Grow
Bitcoin daily miner revenues had dropped to the million level during the lowest point. At this time, bitcoin miner revenues were dropping in double-digit percentages following the plunge in BTC’s price. It would, in turn, trigger massive sell-offs from miners as they scrambled to keep their operations going.
The miner revenues are now rebounding following the price increase. Last week, the price of BTC had grown to more than ,000, and this increase is being reflected in miner revenues. According to data from Arcane Research, daily miner revenues had jumped 5.32% from the previous week’s .4 million to last week’s .55 million. This reversal in the declining trend has once more helped miners to become more gas flow positive, albeit by a small margin.
However, the daily miner revenue would be one of the only few bitcoin metrics to be green for last week. The percentage of miner revenues made up by fees declined significantly, falling 0.68%, as fees per day declined 28.12% to 7,246 from the prior week’s 1,342.
BTC retakes ,000 | Source: BTCUSD on TradingView.com
The daily transaction volumes were also down, which explains the drop in fees realized per day. Transaction volume was down 14.38% for the week, while average transaction value was down 15.66% to come out at 4,429.
Will Bitcoin Miners Stop Selling?
Bitcoin miners have had to offload thousands of their mined BTC to fund their operations. The months of April and June had seen bitcoin miners selling off more BTC than they had produced for the month for the first time ever. It marked the beginning of the sell-off trend for these bitcoin miners.
By now, bitcoin miners have sold more than 4,000 BTC due to declining profitability. However, with the rebound in miner revenue, it is possible that there may be a slowdown in the sell-offs, particularly for public miners.
One of the reasons that could put a stop to it is the increase in the value of mining stocks as BTC grows. An example is the Marathon Digital stock which is up more than 28% from its last week’s low. MARA is currently trading at .96 after hitting a low of .08 last week.
Featured image from Bitcoinist, chart from TradingView.com
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Why The IMF Thinks The Crypto Market Could See “Further Selloffs”
The crypto market is trading in the green with Bitcoin and Ethereum pushing beyond critical resistance levels. The first and second cryptocurrencies by market capitalization record a 10% and 15% profit in the last day and seem poised for more profits during today’s trading session.
Related Reading | Bitcoin Makes Surprise Climb As Fed Discloses 0.75 Point Rate Bump
In order to get more clarity in terms of direction, Bitcoin must close the daily candle above ,000 and Ethereum above ,700. Data from Material Indicators records a thing order book on the sell side if BTC’s price can push above its current levels with high probabilities of hitting ,000 in the short term.
If this rally can push past k, then k comes into focus very quickly. If you are long, don’t forget to take profits along the way.
When the bear wakes up from hibernation he’s going to be hangry. pic.twitter.com/YGe4Swu3wT
— Material Indicators (@MI_Algos) July 28, 2022
In longer timeframes, macro-economic conditions will remain an obstacle to any sustainable rally. In that sense, Tobian Adrian, Director of Monetary and Capital Market for the International Monetary Fund (IMF) predicted more losses in the nascent asset class.
In an interview with Yahoo Finance, Adrian spoke of the risk for the crypto market and risk-on assets, like stocks. For digital assets, Adrian believes that the collapse of a stablecoin could fuel another leg down. The IMF official said:
There could be further failures of some of the coin offerings — in particular, some of the algorithmic stablecoins that have been hit most hard, and there are others that could fail.
The IMF official referred to the collapse of the Terra (LUNA) ecosystem. This event led to the downfall of Three Arrows Capital, Celsius, and other companies in the crypto industry. Thus, contributing to the crash in the price of Bitcoin and other cryptocurrencies.
Adrian claims digital assets might face another similar event but doesn’t mention a specific project with the size of Terra that could trigger it. The IMF official believes stablecoins might add to the selling pressure in the nascent industry due to the alleged vulnerabilities in its collateral:
There’s some vulnerability there, because they’re not backed one to one. [Some fiat-backed stablecoins] are backed by somewhat risky assets…it is certainly a vulnerability that some of the stablecoins are not fully backed by cash-like assets.
BTC’s price with important gains on the 4-hour chart. Source: BTCUSDT Tradingview
Will The Crypto Market Collapse If There Is A 2008 Like Recession?
In addition to the alleged risk from stablecoins, the IMF official spoke about the potential risk of economic recession. The U.S. recently reported its second consecutive quarter with a negative GDP, which should technically spell economic recession.
However, Adrian ruled out that the global market would see something like in 2008. At that time the financial sector was exposed to “shadow banking”, to assets hidden from the banks’ balance sheets which collapse worsening the economic crisis.
Cryptocurrencies could face a bigger obstacle from international regulators. The IMF official claimed that these entities should enforce securities laws to the 40,000 he claims comprised the sector. He added:
Regulating the coins themselves is going to be difficult but regulating the entry points such as exchanges and wallet providers to invest in those coins, that’s something that is very concrete and very feasible.
The U.S. Securities and Exchange Commission (SEC) seems to be following this approach. The Commission has entered into legal battles with major players in the sector, including payment solutions company Ripple and crypto exchange Coinbase.
SEC Chairman Gary Gensler already stated that he is willing to acknowledge that only Bitcoin is out of their jurisdiction. If the Commission turns more aggressive, the crypto market could suffer as crypto projects scramble to meet regulations requirements.
Related Reading | Bitcoin Bounces Off Consolidation Range, What Lies In Store?
This is probably one of the biggest obstacles for the nascent asset class in the coming months along with macro-economic conditions. In that sense, the IMF official might be on point, but cryptocurrencies have been facing regulatory hostilities since their inception.
Bitcoin Daily Exchange Net Flows Shows Sell-Offs Have Not Subsided
Bitcoin daily exchange net flows have been erratic for the last month, to say the least. This is due to the numerous swings between dumping and stacking being done by investors in the space, all of which have affected the price of the digital asset in their own way. However, the net flows have begun to find a balance and it is unfortunately not a positive one.
Outflows Start To Dominate
The inflows and outflows for the last day have not been alarming in a way but the fact that it continues to skew towards inflows which us a testament to the sell-offs that have rocked the place. The data from Glassnode which shows the net flows between the two shows that more BTC was moving into centralized exchanges than those going out of them. A total of 9.7 million BTC were moved out of exchanges in the last day, while inflows came out to 6.9 million. This led to a net positive flow of .2 million.
Related Reading | Bitcoin Drops Below ,000, Is Peter Brandt’s Analysis Still In Play?
This comes as no surprise given that more investors are trying to get out of the digital asset to avoid incurring more losses. Even with the accumulation trend that has been recorded across large investors, it is still not enough to upset the amount of BTC being moved to centralized exchanges to be sold.
Daily On-Chain Exchange Flow#Bitcoin $BTC
6.9M in
9.7M out
Net flow: +.2M#Ethereum $ETH
6.1M in
1.1M out
Net flow: +.1M#Tether (ERC20) $USDT
4.9M in
3.5M out
Net flow: -.6Mhttps://t.co/dk2HbGwhVw
— glassnode alerts (@glassnodealerts) July 12, 2022
This has negatively impacted the price of bitcoin given that the digital asset had declined below ,000 once more. The fact that there is more USDT leaving exchanges than that coming in shows that investors are moving to stablecoins for safety. As such, they are not buying cryptocurrencies like bitcoin.
BTC loses footing above ,000 | Source: BTCUSD on TradingView.com
Bitcoin Investors Try To Catch Up
Even though the price of bitcoin is still declining, the interest from investors, especially smaller ones, has not waned. This renewed interest is seen in the number of addresses holding at least 0.1 BTC. After falling during the price crash, the number has now recovered and has reached a new all-time high of 3,706,019 addresses with more than 0.1 BTC on their balance.
Related Reading | Wall Street Investors Expect Bitcoin To Hit ,000, Is This Possible?
Now, this has not affected the price much in any way given these smaller investors have little control over the market. However, it speaks volumes about how investors are viewing the current market climate, which to many has become an opportunity to buy coins at a discount.
Nevertheless, the digital asset continues to maintain bearish momentum. More addresses are being triggered as the price decline continues. Bitcoin is trending at ,670 at the time of this writing and has now fallen below its 0 billion market cap.
Featured image from Analytics Insight, charts from TradingView.com
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Decline In Bitcoin Miner Revenues Suggests More Sell-Offs May Follow
Bitcoin miner revenues have been in decline since the bear trend began and this has led a good number of miners to sell their BTC holdings in order to keep their operations afloat. However, the expectation that the bear market would soon resolve and miners would once again be in the green has since gone out the window. With miner revenues continuing to plummet, miners may have to resume selling off their holdings to keep up with the market.
Miner Revenues Fall
For the past week, there has been no change in the downtrend in miner revenues. On-chain metrics show that it was down 0.59% from the prior seven days bringing the total daily miner revenues to .62 million. Mostly, it has remained flat during this time and other metrics have dived further into the red during this time.
Related Reading | Institutional Investors Remain Bearish As Short Bitcoin Sees Record Inflows
An example is the fees per day culled by miners. It was down 10.55% in the same time period, one of the highest declines recorded in this time period. With fees per day being so low, the percentage of the daily miner revenues which it makes up is also down, now sitting at 1.50%.
Additionally, the daily transaction volumes are also down, which explains the decline in fees per day realized. This was down 9.75%, although transactions per day had seen some growth. It rose 1.96% in the same time period and is now at 248,071 per day.
Average transaction volume has also followed the decline in network activity with an 11.46% decline. This now stands at ,333.
Bitcoin Miners Selling Bitcoin?
Over the course of the last several months, miners have seen their cash flow plummet. These miners still have outstanding debts from machine orders that they had made during the bull market of 2021 but have not been profitable enough to keep their mining activities going. What had resulted from this was a sell-off among bitcoin miners.
Most prominent of these have been the sell-offs from top public bitcoin miners such as Marathon Digital and Riot Blockchain. In June, it was reported that these public miners had had to sell off more BTC than they had produced in the space of a month.
BTC close to test ,000 | Source: BTCUSD on TradingView.com
Most recently, the news of another bitcoin miner dumping its holdings emerged. This time around, Core Scientific had announced that it had sold the majority of its BTC in a monthly update post. It realized a total of 7 million from the sale of 7,202 BTC. Following this, the miner’s bitcoin holdings now sit at 1,959 BTC.
Related Reading | SEC Still Against Spot-based Bitcoin ETFs. Is There A Light At The End Of The Tunnel?
This trend was expected as soon as the price had begun to drop. However, with no recovery in sight, it is expected that more miners will come forward to sell their BTC. What’s more, these are reports from public miners and there’s no way to tell how much BTC private miners have had to dump.
Featured image from BBC, charts from TradingView.com
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Bitcoin Dominance Remains High As Market Sell-Offs Settle
Bitcoin dominance over the market has still not receded even as the price has fallen below ,000. Just as BTC had taken a hit, so had the altcoins. This had given the pioneer cryptocurrency more leeway to eat back into the market dominance. Even though the market has been brutal to investors in the past week, it is starting to level out and as the end of the month draws closer, indicators are starting to point towards better forecasts.
Bitcoin Still On The High Side
With Bitcoin, there has never been a dispute regarding its dominance in the crypto space. However, this dominance has since been declining as more digital assets gain ground. It was expected that cryptocurrencies such as Ethereum would continue to win more market share but that has not proven to be the case.
Related Reading | Market Sentiment Dangerously Negative As Crypto Fear Index Drops To Two-Year Low
Instead what has happened has been that bitcoin dominance has climbed back up towards seven-month highs. It is currently sitting above 46% and the last time the dominance was this high was back in October 2021 following the September crash.
This dominance is also evident in the performance of the digital asset compared to the other indexes in the space. The month of May had hit all of the indexes hard, resulting in double-digit losses across the board but BTC has held up better in comparison to its counterparts.
BTC dominance recovers above 45% | Source: Market Cap BTC Dominance on TradingView.com
For the month of May, Bitcoin’s price is down 24%, a huge fall. But the small, mid, and large cap indexes have all done worse. The Large Cap Index is down 27% since the month began and the Mid Cap Index is down 31%. In true Small Cap Index fashion when the market is in a downtrend, it has recorded the most losses with a 37% decline since the month began.
Altcoins Not Looking Too Hot
The altcoins market is one that attracts investors due to the fact that it holds high promise for maximum returns. This has seen the market bloom throughout the bull rallies. But just as they are likely to run high during bull markets, they are also likely to incur the most losses during market sell-offs. This has been true so far in recent months. Whereas bitcoin has been able to retain above 40% of its all-time high value, a lot of altcoins cannot say the same.
BTC outperforms other indexes | Source: Arcane Research
An example of this is Cardano. ADA had recorded one of the largest rallies during the 2021 bull market but it has also been one of the worse-hit cryptocurrencies in the bear market. Since hitting its all-time high of .10 in September, it has since lost over 84% of its value.
Related Reading | Bitcoin On-Chain Activity Throttled After LUNA Collapse
Dogecoin, an investor meme coin favorite, is down more than 89% from its all-time high. Solana is down more than 80%. In comparison to these, bitcoin has been one of the best performers in the market, which explains why its dominance has continued to grow.
Featured image from The Washington Independent, charts from Arcane Research and TradingView.com
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Bitcoin, Ethereum Exchange Inflows Suggest Sell-Offs Are Far From Over
Bitcoin and Ethereum have been at the forefront of market sell-offs that were triggered by the UST crash. Since then, sellers have continued to dominate the market and even with buyers making significant moves, it continues to be a seller’s market. The hope had been that a reversal in this trend would be witnessed with the start of the new week. However, inflow and outflow trends have indicated that sell-offs may continue for much longer.
Bitcoin, Ethereum Inflows Remain High
For Monday, there were some encouraging reversals in the price of major digital assets in the space. These included the reclaiming of ,000 on the part of Bitcoin, while Ethereum had recovered once more above ,000. However, this would prove to only make an already bad situation worse as sellers had ramped up inflows into exchanges to realize some gains.
Related Reading | MicroStrategy Will Not Dump Any Of Its Bitcoin, CFO Reveals
What this resulted in was more than .1 billion in BTC flowing into exchanges in a single day. This showed a reversal from the previous day of net flows that had seen outflows surpass inflows once more. Monday was much worse as centralized exchanges saw net inflows of million in a single-day period.
The same was the case for the second-largest cryptocurrency by market cap, Ethereum, whose net flows were also positive, even surpassing that of Bitcoin. ETH had seen exchange inflows as high as 9.4 million in a 24-hour period while outflows had come out to 7.4 million. What this amounted to was a million net flow. This indicates that there are even more sellers in ETH than there are in bitcoin. As such, the decline of the digital asset below ,000 was expected.
BTC price declines below ,000 | Source: BTCUSD on TradingView.com
Recovery In Sight?
The inflow and outflow trends have been alternating for a time now. This is evident in the past two days alone where net flows have been negative one day and then positive the next. Going off this trend, it is possible to deduce that there could very well be a reversal following Tuesday’s trading day.
Related Reading | Eight Consecutive Red Closes: Is Bitcoin Headed For A Recovery?
Alternatively, one thing that comes with a decline in prices has always been investors looking for the opportunity to take advantage of the lower prices. This always leads to an increase in outflows as more investors accumulate tokens.
Another indicator that would suggest a reversal is the USDT inflow and outflow trends. USDT net flows continue to be positive which is good for the market. It shows that investors are bringing more funds into centralized exchanges to be able to purchase and accumulate more tokens.
Featured image from CryptoSlate, chart from TradingView.com
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