Bitcoin price drops sharply, extending losses from the previous session: Bitcoin saw a sharp drop on Wednesday, extending losses from the previous session. The drop came after a major move by cryptocurrencies on a popular exchange affected market sentiment and raised concerns of a major sell-off.
On Tuesday, Bitcoin saw a significant decline after it retraced its decline below the key $60,000 level, reversing recent gains. Other cryptocurrencies also fell in line with Bitcoin’s decline.
Bitcoin fell 6.4% to $58,824 in trading at 10:45 Riyadh time.
$1.88 billion Bitcoin transfer raises concerns: The Whale Alert account on the X platform, which specializes in tracking large transactions in the crypto world, revealed that about 30,000 bitcoins, equivalent to $1.88 billion at current prices, were transferred from a cold wallet to the Binance exchange on Tuesday.
Later reports clarified that the transaction was an internal transfer between Binance wallets, but it still has traders worried about the potential for a large sell-off. Coin transfers to exchanges typically signal a potential sell-off, though whether that will actually happen remains to be seen. However, news of the transfer has added to selling pressure on Bitcoin, which was already easing after its rally faded over the weekend.
Bitcoin capital flows have slowed: A report by Blockchain Research found that net capital flows into Bitcoin have “slowed significantly” in recent months. This slowdown may be the reason behind the coin’s limited performance in the $50,000 to $60,000 range.
Notable volatility over the past year
The number of addresses holding $1 million or more in Bitcoin has been quite volatile over the past year, reflecting overall market trends. At the start of 2024, the number of such addresses was below 100,000, with Bitcoin’s price holding steady near $40,000.
As Bitcoin prices surged above $70,000 in March 2024, the number of millionaire addresses jumped to over 120,000, demonstrating the close correlation between the rise in the price of Bitcoin and the increase in the number of addresses holding large amounts of it.
By mid-year, the market experienced volatility, with the number of millionaire addresses falling to around 100,000 due to downward pressure on the price of Bitcoin, which fell below $60,000.
Such volatility has been repeated in the past. In 2021, when the price of Bitcoin rose to around $65,000, the number of millionaire addresses recorded a similar increase, exceeding 110,000. However, during major corrections, such as those in 2018 and 2022, the number of addresses has declined sharply, highlighting the sensitivity of large Bitcoin holdings to market volatility.
These trends show a recurring pattern where the number of high-value addresses expands during bull markets and shrinks during bear markets, reinforcing the cyclical nature of Bitcoin’s market behavior.
The cryptocurrency market appears to be in a deep bear market, with Bitcoin falling below $60,000. This decline coincides with a notable drop in Ether, the second-largest cryptocurrency by market capitalization after Bitcoin.
These moves could be the result of several factors, including market volatility, regulatory changes, or even global economic impacts. Investors in this sector are closely watching for any indicators that could influence market trends in the coming period.
The largest crypto asset falls by more than 6%
The largest cryptocurrency fell more than 6%, its biggest drop since the Aug. 5 plunge, before recovering some of its losses to trade at $59,400. Meanwhile, Ethereum fell more than 7% before paring some of its losses to trade around $2,463.
Major currencies gave up gains made last week after Federal Reserve Chairman Jerome Powell signaled the possibility of cutting benchmark interest rates that have hit their highest levels in more than two decades.
“The current Fed policy is protecting many assets, making Bitcoin’s decline below its 200-day moving average a concern,” said a senior market analyst.
Traders are awaiting the latest results, which are seen as a bellwether for the artificial intelligence sector that has helped drive global stocks to record highs. Sycamore said the report due out today could affect investor appetite for riskier investments, including bitcoin.
The Nasdaq on Tuesday sought formal permission to offer and trade options based on a specific bitcoin index. According to a report by Reuters, the US Securities and Exchange Commission (SEC) has yet to approve options tied to individual exchange-traded funds (ETFs) that track current bitcoin prices. This includes Nasdaq’s application to offer options on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF.
The proposed options aim to provide a straightforward and cost-effective way for institutional investors and traders to invest in or hedge against the price volatility of bitcoin, the cryptocurrency with the highest market capitalization.
Options are contracts that give the owner the right to buy or sell a specific asset, such as a stock or exchange-traded fund, at a predetermined price on or before a certain date. These contracts provide traders with a cost-effective strategy to amplify their investment positions, while institutional investors often use them to reduce financial risk.
ETF Options Approval Study
Nasdaq plans to launch BTC index options that will be derived from the real-time CME CF Bitcoin Index, which reflects the value of Bitcoin futures and options that are traded. As the U.S. Securities and Exchange Commission (SEC) continues to study the approval of spot Bitcoin ETF options, traders have begun to use alternative financial products. These products include new leveraged Bitcoin-based ETFs, as well as options tied to those funds.
Applications for options for spot Bitcoin ETFs were filed shortly after the SEC signaled the possibility of ETF approval in January. However, Reuters notes that some exchanges have withdrawn these applications and resubmitted them after receiving input from the regulator.
The number of addresses holding at least $1 million in Bitcoin has fluctuated significantly over the past year, reflecting general market trends. At the beginning of 2024, there were less than 100,000 such addresses, with the price of Bitcoin holding near $40,000. As the price of BTC rose above $70,000 in March 2024, the number of millionaire addresses jumped to over 120,000, demonstrating a direct correlation between Bitcoin price movements and the increase in addresses holding large amounts of the currency. By mid-year, the market faced a period of volatility, with the number of millionaire addresses falling to around 100,000 due to downward pressure on Bitcoin, and its price falling below $60,000.
Historically, such volatility has not been unprecedented. In 2021, during the Bitcoin rally that took the price to around $65,000, the number of millionaires addresses similarly increased, surpassing 110,000. However, during subsequent corrections, such as those in 2018 and 2022, the number of these addresses has declined sharply, highlighting the sensitivity of large Bitcoin holdings to market volatility.
