Bitcoin Faces Potential Correction Below $50K as Whale Activity Intensifies

Cryptonews John Brightwater September 7, 2024

Bitcoin Faces Potential Correction Below $50K as Whale Activity Intensifies

As market dynamics unfold, a potential correction of Bitcoin below the critical $50,000 threshold may soon become a reality, particularly as we approach the historically less favorable trading month of September. Recent actions by prominent investors, commonly referred to as “whales,” illustrate this trend. Notably, an astute whale entity liquidated 100 BTC, valued at over $5.3 million, securing profits exceeding $206,000. Furthermore, data provided by the on-chain analysis firm Lookonchain reveals that approximately 402,800 BTC worth around $21 billion has been acquired by 836,000 addresses, with the expectation that these holders will look to sell near their break-even price.

The notable selling patterns of whales can significantly influence short-term cryptocurrency price movements, prompting traders to monitor these activities closely for potential market sentiments. Arthur Hayes, the former CEO of the crypto exchange BitMEX, has voiced apprehensions regarding a potential plunge below the $50,000 mark, predicting it could occur as early as this weekend. In a recent post, he expressed, “BTC is heavy; I am gunning for sub-$50K this weekend. I took a cheeky short. Pray for my soul, for I am a degen.”

In the preceding 24 hours leading to September 7, Bitcoin’s price fell by 1.4%, dropping to $54,340 and witnessing an almost 8% decline over the week. Analysts from Bitfinex have also indicated that a correction below this psychological level could precede a genuine bull market, noting that such movements are not arbitrary but rather reflect historical price cycles.

Adding to the market’s complexity is Galaxy Digital’s recent deposit of $78.5 million in BTC to Coinbase Prime, a maneuver that raises further concerns about impending sell pressure. As per Alvin Kan, the Chief Operating Officer of Bitget Wallet, the lead-up to the Federal Reserve’s September 18 rate cut announcement may exacerbate downward pressures on Bitcoin. Mr. Kan elaborated, “We expect that Bitcoin and the equity markets will experience downward pressure leading up to the Fed’s official rate cut announcement. Once the rate cut is confirmed, we may see a short- to mid-term boost in speculative assets.”

Investors are currently eyeing increased odds of an interest rate cut by the U.S. Federal Reserve, with the CME FedWatch tool indicating a 70% probability for a 25 basis point reduction. In this environment of volatility, the possibility of Bitcoin encountering liquidity challenges remains, which could lead to abrupt price fluctuations. Mr. Kan highlights that there is a 40% likelihood of Bitcoin trading below $50,000 at this juncture.