Bitcoin recently rose as high as $61,000 per unit, thereby reaching a new all-time high. However, it looks like this sudden surge wasn’t designed to last, as the currency dropped over the weekend to a “measly” $56,000, about $5,000 less than where it stood just a few days ago.
Bitcoin Has Incurred a Serious Dip
What could have possibly contributed to this drop? This is a question, naturally, that’s making its way through the heads of many analysts and industry experts alike, and it looks like a massive market selloff may be to blame.
The selloff is likely to have occurred on Saturday. More than 185,000 separate trades took place over the weekend, and as much as $2.22 billion in bitcoin was sold or moved. This is something we’ve discussed time and time again; the crypto market cannot handle it when so many people sell at once and when such a large quantity is nullified within a limited timeframe.
This undoubtedly had a lot to do with the crypto space falling. Exchanges from Binance to Bybit claim to have witnessed heavy withdrawals over single 24-hour periods, and as much as $18.9 million may have been liquidated via the Huobi exchange alone.
This has been a serious problem for bitcoin over the years. The minute it surges to a new high, everyone wants to sell and rake in the short-term gains. Bitcoin is an asset designed for the long haul, but when you have so many short traders making their way into the crypto trading game, the asset is likely to stumble here and there, and this week was no exception.
In addition, the large amount of liquidated or moved bitcoin suggests that either whales or institutions may have been behind the recent dip, which is always going to be worse than what retailers can do. One particular transaction occurred through a Gemini hot wallet. As much as $1 billion in BTC was transferred to the wallet, which according to data, suggests that an institutional trader of some kind may have been liquidating another account somewhere and taking in a profit.
Ki Young Ju – CEO of South Korean analytics platform Crypto Quant – said in an interview:
What’s clear is that it’s not an internal transfer, and it went to an exchange user deposit wallet.
Institutions Are Likely the Culprits
Justin Barlow – researcher with crypto data provider the TIE – offered similar sentiment, explaining:
The market saw the news of this transfer, and this had an impact whether it was from an internal Gemini wallet or not. It’s important to note that miners sold over $112,000 BTC in the first week of 2021 while prices actually rose from $29,000 to $40,000, indicating that this exchange inflow/ outflow signal may actually be a bad representation of market sentiment.