As a seasoned analyst with extensive experience in the crypto market, I believe that today’s crypto market decline was driven by two primary factors: Mt Gox’s Bitcoin transfer and the drop in Bitcoin ETF inflows.
Today, the crypto industry experiences a modest dip as the global market capitalization decreases by 2%. Consequently, the total crypto market capitalization now stands at $2.55 trillion, having peaked at $2.63 trillion earlier. Furthermore, the heatmap reveals that most cryptocurrencies are displaying losses, indicating a market downturn.
Over the past 24 hours, Bitcoin‘s price dropped by 3%, while Ethereum experienced a 3% loss despite surging demand for its ETF. The other cryptocurrencies followed suit. Now, let’s explore the potential reasons behind this market downturn in our latest blog post.
Why Was the Crypto Market Down Today?
As a researcher studying the cryptocurrency market, I’ve observed that following the bullish conditions in March, there was a significant downturn. This trend continued until recently when the market began to recover. The shift in market sentiment from neutral to greed on the fear and greed index is noteworthy. However, it’s important to mention that this drop in price pierced through the previous bullish possibilities, suggesting a more bearish outlook for now.
As a researcher, I’ve identified two primary causes for the recent decline. First, there was the high-profile Bitcoin transfer from Mt Gox, which may have led investors to sell off their holdings due to uncertainty and fear. Second, the decreasing inflows into Bitcoin ETFs also contributed to the drop in price. Let’s delve deeper into these factors.
Mt Gox Transferred $9 billion worth of BTC
Approximately ten years after being closed down, Mt Gox – once a widely-used cryptocurrency exchange – initiated a transaction moving 141,686 BTC (equivalent to around $9.3 billion) to three unidentified wallets. The intention behind this action was to repay affected investors following the infamous 2014 hack. Regrettably, rather than instilling relief among crypto investors, the significant transfer of $9 billion worth of BTC sparked widespread panic instead.
As an analyst, I’ve observed that today, MtGox transferred a total of 141,686 Bitcoin (approximately $9.63 billion) into the balances of three fresh wallets. Similarly, they moved 142,846 Bitcoin Cash (around $66.4 million) to a newly created wallet.
These transfers are in preparation for repayments.
The repayment deadline is Oct 31, 2024.
New wallets:…
— Lookonchain (@lookonchain) May 28, 2024
As an analyst, I’d describe it this way: I identified 13 distinct transfers of Bitcoin (BTC), each deposited into three unidentified wallets. The monetary values of these transactions spanned from a mere $3 to a staggering $2.2 billion. Consequently, the BTC price plummeted from its peak at $70,000 down to $67,918.13. This steep decline triggered significant selling pressure across the entire crypto market.
Additionally, one of Mt Gox’s wallets transferred approximately 142,846 BCH tokens, equivalent to around $69.7 million, to a non-designated Bitcoin Cash address, making it the 11th largest crypto whale holding BCH.
Bitcoin ETF Inflows Turned Stationary
The demand for a Bitcoin ETF has remained strong, causing the inflow of funds into Bitcoin ETFs to reach a plateau at approximately $13.68 billion for three consecutive days. This pause in growth follows a period of significant increase where daily net inflows surpassed $252 million on the 25th of this month. The sluggishness in ETF inflows may reflect investors’ cautious approach to potential short-term profits in the crypto market.
The U.S.-based Bitcoin spot ETFs saw the highest net inflow in the past week since mid-March.
— Mads Eberhardt (@MadsEberhardt) May 27, 2024
Despite the decline in the crypto market, investors remain optimistic and this is primarily due to the anticipated Ethereum ETF approval. The ongoing talks about potential ETF projects have traders keeping a close watch on Ethereum and other altcoins, hoping for an early surge in prices.
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2024-05-28 20:06