Investors sent $2 billion to exchanges Monday, the highest since Terra’s collapse.
Traders are sending billions to exchanges as crypto gives up gains after rallying to the highest since mid 2022. Analysts are pointing to profit-taking rather than a fundamental driver for the drop.
Crypto holders sent $2 billion of Bitcoin to exchanges, according to Glassnode, the highest daily amount since the collapse of Terra. Funds sent to exchanges signal traders are getting ready to sell their assets.
Bitcoin has tumbled 7% to as low as $40,753 since Sunday, while Ethereum’s Ether dropped 7% to $2,162. Both assets are at the lowest in 10 days. The correction comes after BTC and ETH had rallied to the highest since April and May, respectively.
Yesterday’s crash triggered $330 million of liquidation in crypto futures contracts, although Coinglass reported that the figure had reached as high as $516 million on the day.
Profit-Taking
The widespread sell-off signals profit-taking from traders, noted analyst for CryptoSlate, James Straten.
Head of research for investment firm CoinShares, James Butterfill, told The Defiant that the price action suggests it was “more of a technical pullback,” and not a shift in broader market sentiment.
Butterfill explained that the correction isn’t surprising with prices rising considerably in December, and a Relative Strength Index (RSI) consistently over 70. The RSI is a tool used to measure the short-term momentum of the market. When over 70, the market is considered to be overbought, whereas under 30 it flashes oversold.
Positive Macro
Positive macro indicators also curbed crypto’s price rally, explained André Dragosch, head of research for ETC Group, a German institutional investment firm.
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“Stronger than expected” US job data published last week is a factor, said Dragosch, along with US non-farm payrolls growth and the unemployment rate were stronger than consensus estimates.
The above coincides with a decrease in overall risk appetite from investors, “putting a lid” on the recent rally, he said.
Not all crypto assets are sliding.
Solana’s SOL, which has been enjoying a bullish 2023, remained unfazed by the broader sell-off and changes hands at $69.51. ORDI, the first BRC-20 token to reach a $1 billion market cap, revels in double digit gains today, trading at $52.67.
Fund Flows
CoinShares’ latest institutional inflow report, published yesterday, highlighted that large entities continue to gobble up crypto, with 11 weeks straight of accumulation.
In anticipation of the impending approval of a spot Bitcoin ETF, Butterfill told The Defiant that dips are for buying, offering “potential entry points.” He highlighted that despite rising prices, volatility remains remarkably low.
Butterfill also indicated that there are plenty of factors to support current price levels, including rate cuts by the FED, the rising correlation between bond and equities driving the need for greater diversification, and the upcoming Bitcoin halving.
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