The Recent Cryptocurrency Market Downturn
Bitcoin took a significant hit over the weekend, plummeting below $53,000 and reaching a new low since August 5th. Whales in the crypto space started selling off their holdings to avoid liquidation. Pacman, the founder of Blur and Blast, boldly declared the arrival of a bear market on the 7th.
Bitcoin and Ethereum Price Movements
Driven by concerns over the U.S. economy resulting from the August non-farm payroll data, Bitcoin nosedived from around $57,000 on Friday to a low of $52,550 on the 7th, marking its lowest point since August 5th. Despite a slight rebound on Saturday, prices once again dropped below $54,000 after midnight on the 8th, before recovering slightly to $54,288 at the time of writing. The possibility of a double bottom is something to watch closely.
Ethereum also witnessed a downward trend, starting at around $2,400 on the 6th and hitting $2,150 on the 7th, its lowest point since August 5th. It has since seen a slight increase to $2,276 with a 2% gain in the past 24 hours.
The Bear Market Perspective
Despite the ongoing market downturn, Pacman noted that the current bear market is different from the one in 2019, which was particularly disheartening with minimal activity. Presently, the landscape includes DeFi, decentralized perpetual exchanges, NFTs, yield-bearing stablecoins, and a substantial user base actively engaged in on-chain activities. Pacman emphasized the resilience and growth potential within this sector despite short-term price uncertainties.
Whales’ Precautionary Measures
Notably, whales seem to be taking collective preventive actions by selling off coins to avoid potential liquidation. According to data analyst @ai_9684xtpa, an address holding a significant amount of ETH sold 5,178 wstETH and stETH within four hours to prevent liquidation, totaling $12.84 million at an average price of $2,481. The address still holds 24,651 stETH as collateral worth $56.09 million and has borrowed 30.91 million USDT, with a health index of 1.48, triggering liquidation if ETH drops to $1,823.
Another analyst, 餘燼, monitored James Fickel’s address, known for its ETH/BTC trading, which sold 3,000 ETH and converted it to 124 WBTC after Ethereum’s recent drop. James Fickel’s long position in the ETH/BTC exchange rate has reduced considerably as the rate continues to decline, with the address previously selling 2,981 WBTC at its peak by the end of May but now holding only 2,316 WBTC.
Market Reactions and Speculations
The recent downturn in Bitcoin and Ethereum prices, coupled with the lowest non-farm payroll figures in three years, has sparked a surge in hedging sentiments. The current market situation raises questions about the true value of Bitcoin, prompting a reassessment through various valuation methods. The actions of whales in selling off assets to avoid liquidation contribute to the overall market sentiment and speculation about potential Federal Reserve rate cuts.
