Blockchain

The play-and-own mobile gaming platform GAMEE suffered an exploit of its GMEE token contracts on Polygon that led to the theft of 600 million GMEE tokens and left the crypto community pondering questions.

GAMEE Confirms $15M Exploit On Polygon

On January 22, GAMEE Token’s official X (formerly Twitter) account advised its users to refrain from engaging with the digital asset while their team investigated the GMEE token-related security comprise it had just suffered.

The GMEE token is an ERC-20 utility token “designed to be the currency of access, action, and governance within the GAMEE ecosystem,” as their website states.

$GMEE | URGENT

There has been a security incident involving the GMEE token. As a precautionary measure, we advise all users to refrain from engaging with $GMEE until further notice.

Our team is actively investigating the situation, and updates will be provided soon.

— GMEE Token (@GAMEEToken) January 22, 2024

Before the official announcement, crypto users quickly noticed the token’s sudden price crash and the transactions behind it. This left GAMEE users and the general crypto community wondering if an exploit had occurred.

In the early hours of January 23, GAMEE’s team returned to the X platform to explain what happened and the steps to come.

The thread explains that their preliminary investigation indicated that the GMEE token contracts on Polygon had been compromised via unauthorized GitLab access.

This compromise resulted in the theft of 600 million GMEE tokens worth approximately $15.28 million at the time of the exploit. The compromised tokens were immediately converted to ETH and MATIC and exchanged via various decentralized exchanges (DEXs) in the following hours, drastically impacting the GMEE token price.

The team behind GAMEE explained that after noticing the Polygon GMEE deployer address was compromised, they secured the token contract ownership and all associated contracts by transferring ownership to a “new secure address.”

The team also clarified that only proprietary team token reserves were affected, and the exploit did not affect assets owned by the community, as “GAMEE does not custody or manage any community-owned assets.”

GAMEE expressed its understanding of how the impact of the unauthorized transactions could have affected the GAMEE community, as it led to price volatility and limited use of the GMEE token while investigations were taking place.

The next steps for GAMEE will consist of an impacted user identification process to evaluate the best way to support the affected part of the community. Additionally, they plan to provide a real-time update on the details that further investigations will provide as an effort to keep trust and transparency.

Lastly, the user was advised to exercise caution “given the volatile market conditions and potential liquidity impacts driven by CEX measures.”

GMEE’s Violent Price Drop

Around the time of the exploit, the GMEE token had been trading at $0.02554112, according to CoinGecko’s data, and it had been previously sitting at the $0.027-$0.026 range throughout the weekend.

Shortly after the exploit, the prince crashed to $0.01155577, reaching its lowest point of $0.00897251 in the early hours of today.

It’s worth noting that many saw the price crash as a possibly once-in-a-lifetime opportunity to profit. Various users shared that they had bought the dip and even advised others to do it. One X user said, “One man’s trash is another man’s treasure.”

At writing time, the GMEE token trades at $0.016999, a 31.5% decline in the last 24 hours.

An Ethereum (ETH) whale has recently executed a series of transactions, carrying out a considerable movement of funds across various platforms. The blockchain analytics platform Spot On Chain initially brought to light this activity, involving roughly $46.02 million in ETH tokens.

Deciphering The Whale’s $46M ETH Transfer Across Major Platforms

The whale, operating through a network of eight wallets, initiated the withdrawal of these funds from major exchanges, Binance and Bitfinex.

The complexity of these transactions did not end there. Following the withdrawals at an average price of around $2,419 per ETH, the whale engaged with Lido, a prominent liquid staking solution.

This move involved withdrawing 50.15 million USDT from Aave, a well-known decentralized finance (DeFi) protocol, and exchanging the stablecoin for 19,021 ETH, amounting to $46.02 million. Spot On Chain also revealed that three wallets still hold about 30 million USDT in Aave.

Over the past 2 days, an entity with 8 wallets withdrew $46.02M in $ETH from #Binance and #Bitfinex at ~$2,419, then staked with #Lido:

– 5 wallets withdrew 50.15M $USDT from #Aave to CEX for 19,021 $ETH ($46.02M).

– 3 wallets still hold ~30M $USDT in #Aave and may deposit it… pic.twitter.com/vqPYTTaWjT

— Spot On Chain (@spotonchain) January 23, 2024

This lingering balance has sparked curiosity as it might indicate that these funds might soon be deployed into a centralized exchange (CEX) for further acquisition of Ethereum.

The context of these whale movements is particularly crucial, considering the current market conditions Ethereum is experiencing. Over the last 24 hours, Ethereum’s price has dropped by 7.7% to trade at $2,211.

This bearish trend is not isolated, as the entire crypto market, led by Bitcoin, appears to be in a downturn. Based on the key support zone between $2,380 and $2,461 highlighted by crypto analyst Ali, Ethereum appears to have breached a critical demand zone. This break could lead to a further plunge towards the $2,000 mark, escalating concerns about a bigger correction.

Ethereum Plunge: Liquidations Amid Sell-offs

The Ethereum market has seen a dip in value and a noticeable impact on traders. Data from Coinglass highlights that the recent market conditions have led to significant liquidations. In just 24 hours, over 137,000 traders were liquidated, amounting to $357 million.

Ethereum traders bear a significant portion of these total liquidations, with long and short traders suffering $72.82 million and 6.30 million in liquidations, respectively, in the past 24 hours.

Interestingly, these market conditions have coincided with notable actions by Celsius, a crypto lending firm currently navigating financial challenges. Recent on-chain analysis indicated that Celsius has been actively moving large sums of Ethereum, including a 13,000 ETH deposit on Coinbase.

The #Celsius wallet deposited 13K $ETH($30.34M) to #Coinbase and 2,200 $ETH($5.13M) to #FalconX again in the past 10 hours.

Currently, 2 staking wallets of #Celsius still hold 557,081 $ETH($1.3B).

Address:https://t.co/3gGOucC9gYhttps://t.co/zodN4gzVHKhttps://t.co/Jjt9fCN2Ej pic.twitter.com/E9DIZ9KDAH

— Lookonchain (@lookonchain) January 23, 2024

This aligns with reports from Arkham Intelligence, which noted that Celsius liquidated over $125 million in Ethereum to address its financial obligations. This auction was primarily geared towards paying off creditors, aligning with the firm’s bankruptcy proceedings.

Featured image from Unsplash, Chart from TradingView

In the midst of the tumultuous landscape of the price volatility of Bitcoin, a prominent figure stands out, exuding unwavering optimism amidst the chaos: Samson Mow, the self-proclaimed evangelist of the cryptocurrency.

Recently transitioning from his Chief Strategy Officer role at Blockstream to assume the position of CEO at Jan3, an entity focused on facilitating Bitcoin adoption at a nation-state level, Mow is placing a substantial bet on the future of the digital gold.

Bitcoin Proponent Sees Investor Hopes Dashed

Amidst whispers of a potential plunge below the $30,000 mark, Mow remains resolute in his positive outlook. Dismissing concerns, he took to Twitter, stating, “I think they’ll be disappointed.”

This declaration comes in the wake of Bitcoin experiencing a dip below $38,000, attributed to a significant sell-off of Bitcoin Exchange Traded Funds (ETFs), particularly the Grayscale behemoth. A staggering 15,000 BTC, equivalent to $566 million, exited the market, leaving Grayscale with empty coffers.

From what I’m hearing, a good amount of investors are thinking #Bitcoin will drop to the low $0.03M range and waiting to buy then. I think they’ll be disappointed.

— Samson Mow (@Excellion) January 22, 2024

However, the cryptocurrency landscape is not devoid of conflicting sentiments. While Grayscale is shedding its BTC holdings, other ETF issuers are adopting a different stance. Notable among them is Fidelity, which acquired 9,755 BTC, amounting to $386 million.

Fidelity emerged as the leading player, securing 5,312 BTC, valued at $210 million. This divergence in approaches indicates that not all market participants are hastily divesting their Bitcoin assets.

On Dips And Pains

Within the community, opinions diverge, creating a symphony of mixed notes. Some participants, in response to Mow’s tweet, express enthusiasm for a potential bargain sale of the top crypto, eagerly anticipating an opportunity to accumulate more during the dip. Others brace themselves for what they term “max pain,” envisaging a scenario akin to Mow’s own predictions of a Bitcoin surge to $1 million.

The concept of “max pain” is adapted from traditional financial markets and suggests that markets will likely follow the “Max pain theory,” which indicates that markets will likely follow the path that causes the maximum financial pain to the most significant number of market participants.

Max Pain Theory indicates a flush of the #Bitcoin shorts is next. https://t.co/zuJe2vpEEX

— Samson Mow (@Excellion) January 14, 2024

How About A Million For Bitcoin?

In the context of Bitcoin, Mow believes that a quick rise to $1 million would disrupt the strategic plans of many, including nation-states and companies looking to invest in Bitcoin.

In the area of monetary innovations, Mow has released a significant comment regarding Bitcoin and its significance for modern civilization. In instance, Mow boasted on Twitter that Bitcoin was a thousand times better than any other financial technology.

There are no diminishing returns when a step change takes place. Bitcoin is not a marginally better $ or gold. #Bitcoin is a 1000x improvement on any monetary technology devised in all human history. Diminishing returns is an irrelevant concept when the entire game has changed. pic.twitter.com/0jbotFLDqc

— Samson Mow (@Excellion) January 22, 2024

Mow forewarns of a crypto blitzkrieg to the million-dollar mark, a surge that would spell disappointment for various stakeholders, from Jan3 with its strategic plans to analyst PlanB and his stock-to-flow model, to MicroStrategy with its ambitious Bitcoin acquisitions, and even El Salvador, whose dreams of a Bitcoin-backed bond would dissipate beyond $100,000.

In navigating the Bitcoin rollercoaster, the average investor is urged to brace themselves for a journey filled with hairpin turns, dizzying drops, and, if Mow’s predictions materialize, a potential ascent to the much-anticipated $1 million peak.

Featured image from Freepik

Ethereum over the last several weeks finally began to gain some strength against Bitcoin and other top performing cryptocurrencies. But in the past few weeks, the upside has since been almost entirely erased.

The up – then right back down – price action has formed a potential bearish Japanese candlestick reversal signal. Will ETHUSD continue down further, or surge back into an uptrend? We’ll explore the technical signals to watch for.

Ethereum ETHUSD Possible Reversal Signal

The two top cryptocurrencies by market cap, Bitcoin and Ethereum, have had an unusual divergence between the two assets in terms of price action. While Ethereum bottomed early in 2022, Bitcoin found its bottom later in November of the same year. But in 2023, BTC outperformed ETH by a wide margin.

All this started to change recently as spot BTC ETF news began to cool down, and ETH ETF rumors began to swirl. Post-approval selling of BTC, among other factors, have caused an over 20% correction in Bitcoin and Ether. Price action in ETHUSD, however, has formed what appears to be an evening star candlestick pattern.

In Japanese candlestick analysis, an evening star pattern is a possible bearish reversal pattern, with enough potential to change a bull market to a bear market.

All About The Evening Star Pattern

An evening star is a three-candlestick pattern consisting of a tall white candle, a doji, and a large black candle that wipes out at least 50% of the first white candle. The more of the white candle that is engulfed, the stronger the evening star signal can potentially be.

The pattern helps reveal the underlying market sentiment. The large white candle shows increased enthusiasm and strength by bulls, which is met with resistance and confusion. Selling eventually kicks in, as bears regain control and show surprise strength against bulls.

With any Japanese candlestick pattern, context is important. The reversal signal appearing at the top of a rally and with bearish technical indicators firing gives it more possible significance. The same signal appeared at the peak of the 2021 bull market, kicking off an 82% drawdown.

The candlestick pattern is only confirmed after a weekly close. It also requires follow through by bears, pushing ETHUSD to new 2024 lows. If bulls can make a stand and take back 50% or more of the candle, this signal could be invalidated.

According to on-chain data from SolanaFloor, Solana is dominating other blockchains, including Ethereum and Polygon, across various non-fungible token (NFT) activity metrics in the third week of January.

Solana Dominates Ethereum, Bitcoin In NFT Activity

In a post shared on X on January 23, Solana maintained its NFT dominance among competing blockchains, mainly Ethereum and other high throughput alternatives. Thus far, the blockchain has the highest numbers in unique wallets, transactions, unique buyers, and first-time wallets over the past week. 

To illustrate, Solana had over 106,000 unique wallets by the third week of January 2024. This is more than twice those created in Ethereum. Meanwhile, there were over 22,000 first-time wallets on Solana, roughly 3X those in Ethereum and 2X in Bitcoin.

At the same time, more than 2.8 million transactions were posted on Solana. This figure is over 20X those in Ethereum during the same time frame. 

Extrapolating from this data suggests that the blockchain is increasingly popular among NFT projects, collectors, and traders. Several factors could be contributing to Solana’s NFT success. 

The platform is known for its high throughput and low transaction fees. Considering how minters and active traders are sensitive to trading fees, Solana is emerging as a layer-1 option for projects wishing to enjoy the security of the mainnet while also benefiting from low transaction fees.

Legacy chains, including Ethereum, continue to struggle with on-chain scalability. Minting on the mainnet often translates to high fees, which can decrease profitability, especially for active traders and collectors.

Beyond scalability advantages, Solana’s ecosystem is rapidly expanding. Despite the catastrophic drop of SOL prices at the end of 2022, the spectacular revival in 2023 activated on-chain activity with meme coins blooming and NFT projects opting to launch on Solana.

The ongoing recovery of SOL and the increasing number of projects opting to deploy on the mainnet could further drive on-chain activities, including NFT minting and trading, to new levels in 2024.

Developers At Work, Will SOL Reclaim $125?

As the network draws users, its developers are also working to make the platform more robust and decentralized. In 2024, Solana developers plan to activate Firedancer, a validator client developed by Jump Capital. This client will help further decentralize Solana’s infrastructure, improve performance, and substantially improve reliability, eliminating network hitches that plagued the blockchain in 2022 and early 2023.

SOL is cooling off, trading at around $80 when writing. The coin is down 34% from December 2023 peaks and below the dynamic 20-day moving average, pointing to bears.

Key support remains at around $70. If there is demand at this price point, SOL may recover and retest $125 in the sessions ahead.

In the past month, the Bitcoin price has experienced a significant decline after reaching a 22-month high of $49,000. Currently, the largest cryptocurrency has fallen below the crucial $40,000 mark, raising concerns about the prospects of the ongoing bull run and the overall bullish market structure. 

However, there are indications that the bottom of the current downtrend may be near, potentially setting the stage for a potential price reversal.

Bitcoin Price To Avoid Plummeting To Low $30,000s

Market analyst Marco Johanning sheds light on the situation, offering insights into the Bitcoin price movement. Johanning suggests that it won’t be long until Bitcoin reclaims the $41,500 level or potentially rises from a lower level if a specific scenario unfolds. 

According to Johanning, Bitcoin will finally encounter significant liquidity on the downside. Notably, the price has touched around below $39,000 multiple times, indicating the presence of substantial liquidity at these lows. 

Moreover, Johanning addresses the skepticism surrounding the price of around $37,800, arguing against widespread expectations of a drop into the low $30,000 range. 

Johanning emphasizes that the primary liquidity lies below $40,000 and is not in the low $30,000 range. Traders profited from the low $30,000 range have likely adjusted their stop orders to protect their gains, creating a layer of support below the recent equal lows. 

As the price starts hitting these stop orders, automatic selling occurs, further down the price until it encounters significant buy pressure. The analyst points out a daily order block at $37,700 and high timeframe (HTF) support at $38,5000, indicating the potential for notable buy pressure in these price regions. 

Johanning also highlights the likelihood of filling Chicago Mercantile Exchange (CME) gaps and Imbalances, with the next imbalance anticipated below $33,000.

Short Squeeze Rally Imminent? 

According to Johanning, the prevailing sentiment reveals many bears waiting to short a market dump. Johanning predicts that a short squeeze could occur once the price reverses, leading to a rapid price increase.

In terms of Fibonacci retracement levels, Johanning suggests that since the Bitcoin price has already lost the $40,200 level, it could potentially fall to the 0.5% Fibonacci level, which coincides with those above the $37,800 level. 

Johanning speculates that the price may briefly touch $37,800 before closing above the HTF support level of $38,500, setting the stage for a potential upward movement.

The recent downtrend in Bitcoin’s price has raised concerns about continuing the bull run. However, market analyst Marco Johanning presents several key arguments supporting the possibility of a price reversal. 

With Bitcoin’s current price at $38,900, there is a possibility of increased buying pressure in this region. The support wall at $38,5000 has demonstrated resilience thus far, and its performance will be closely observed. 

If the support wall fails to hold, the market will observe how the $37,800 price level performs and whether it aligns with the analyst’s thesis.

Featured image from Shutterstock, chart from TradingView.com

An analyst has explained that a Bitcoin price recovery may be highly likely based on this pattern forming in a metric.

Bitcoin Coinbase Premium Gap Is Becoming Less Negative

In a CryptoQuant Quicktake post, an analyst pointed out how the selling pressure on Coinbase has been diminishing recently. The relevant indicator here is the “Coinbase Premium Gap,” which keeps track of the difference between the Bitcoin prices listed on cryptocurrency exchanges Coinbase and Binance.

When the value of this metric is positive, it means that the price listed on Coinbase is greater than that on Binance right now. Such a trend suggests either the buying pressure on the former is higher or the selling pressure is lower.

On the other hand, negative values imply the buying pressure on Binance may be greater as the price of the cryptocurrency listed there is higher.

Now, here is a chart that shows the trend in the Bitcoin Coinbase Premium Gap over the last couple of weeks:

Between the start of the month and around the time the Bitcoin spot ETFs went live, the Coinbase Premium Gap had remained optimistic, implying that buying pressure on the exchange had been stronger.

The exchange is popularly known to be used by US institutional investors, so it’s possible that the positive premium was due to these large entities constantly accumulating in the leadup to the ETFs.

The chart reveals that the Coinbase Premium Gap took a sharp plunge into negative territory once this event was over, implying that the American holders significantly increased their selling pressure.

Coinciding with this negative spike, Bitcoin observed its first major post-ETF plunge. This event started the indicator’s extended run inside the red zone, a sharp contrast to its trend in the year thus far.

Almost a week after this first crash, the cryptocurrency registered another sharp plummet, and with this drawdown, too, the selling pressure on Coinbase went up.

During the past few days, BTC has experienced another wave of price drops, but this time, the Coinbase Premium Gap hasn’t reached highly negative values. Instead, the indicator even briefly revisited the neutral mark during this plunge.

This would imply that the selling pressure from the US institutional traders may now be weakening. While they are still likely selling, the degree of their selling isn’t much higher than that of the global investors who use Binance.

“In the current range, there is a high likelihood of a rapid price recovery,” the analyst says, based on this pattern that has taken shape in the Coinbase Premium Gap.

BTC Price

Following the latest drawdown, Bitcoin has broken under the $39,000 level for the first time since the start of December.

Previous speculation has resurfaced regarding one of the largest potential Bitcoin buy-ins in the history of cryptocurrency. According to crypto analyst Justin Verrengia, there are indications that Saudi Arabia and Qatar may be gearing up for an enormous Bitcoin purchase, with an official announcement anticipated in the coming week. 

Saudi Arabia, Qatar Rumored To Purchase 1 Million BTC

In a recent video published on X (formerly Twitter), Verrengia, the host of the popular crypto channel Crypto News Alert spoke on the recent rumors sparked by crypto analyst Mark Keiser regarding a potential large-scale Bitcoin purchase by Middle Eastern country Saudi Arabia and sovereign state Qatar. 

The crypto analyst disclosed that both governments are potentially considering purchasing about 1 million Bitcoins valued at around $500 billion. Verrengia compared the large-scale buy-in with the 1.1 million BTC held in the wallet address owned by pseudonymous Bitcoin creator Satoshi Nakamoto. He hinted that Saudi Arabia and Qatar may be planning to purchase this staggering sum of Bitcoin using their sovereign wealth funds. 

In his video, Verrengia showcased several X posts from Bitcoin maximalist, Mark Keiser, who has been spreading speculations about the possibility of a large-scale Bitcoin purchase by Saudi Arabia and Qatar since 2023. 

Keiser suggested in his posts that the potential 1 million BTC investment by these two governments could make asset management company BlackRock and crypto intelligence company Microstrategy “look like peanuts” in comparison. 

The crypto analyst also disclosed that Saudi Arabia may be expanding its interest toward digital currencies. This shift can be seen in the recent partnership between the largest oil company in Saudi Arabia, Saudi Aramco, and Japanese financial service, SBI Holdings. Verrengia has heralded this movement as “oil money entering Bitcoin.” 

Bitcoin Price Sees Potential Rise Above $50,000

In his video, Verrengia also shared a post by Keiser, who predicted a $100,000 god candle if Saudi Arabia and Qatar purchase the 1 million BTC. A god candle here suggests a unique price pattern where the price of Bitcoin shoots upward by 100%, pushing it to new all-time highs. 

Presently, the price of Bitcoin is trading around $38,966.81, reflecting a 9.01% decrease in the past seven days, according to CoinMarketCap. A purchase of 1 million BTC would represent a substantial chunk of the total BTC supply, effectively attracting the attention of institutional investors. This could potentially trigger a Fear of Missing Out (FOMO), driving demand for Bitcoin through the roof and sending Bitcoin’s price above $50,000. 

In 2023, the hype surrounding the approval of Spot Bitcoin ETFs pushed Bitcoin’s price to a record high above $49,000. A similar result to the coveted $50,000 price mark could be attained if Saudi Arabia and Qatar purchase the rumored 1 million BTC.

In a new video update, renowned crypto analyst Michael van der Poppe dissected the current dynamics of the crypto market, emphasizing the potential of select altcoins. VVan der Poppe’s analysis provides a strategic viewpoint for potential investors, focusing on the intricate relationship between Bitcoin’s (BTC) price movements and the broader altcoin market.

Van der Poppe started by acknowledging the mixed performances among altcoins, with some consolidating, others correcting, and a few showing remarkable strength. The crux of his analysis hinges on the intricate relationship between Bitcoin’s market behavior and the resultant impact on altcoins.

He highlighted the current consolidation phase of Bitcoin, noting, “Bitcoin is currently looking at a case of consolidating which means that if Bitcoin is bottoming out… that can be the kickstart of altcoins to start firing up.”

Furthermore, the crypto analyst delved deep into market capitalization metrics, particularly emphasizing the Total 2 market cap (excluding Bitcoin) and Total 3 market cap (excluding Bitcoin and Ethereum), to underscore the latent potential in altcoins. He pointed out, “We are at the levels of March 2022… the total market cap lagging says that we are looking at a case of other cryptocurrencies to start trending outside of Bitcoin.”

Top 3 Altcoins To Buy Now

The first altcoins which van der Poppe picked is Ethereum. He linked ETH’s price movements with broader market events, including the Bitcoin halving and potential regulatory approvals and suggested, “Ether is always going to pick up in a pace that is due to a period of consolidation of Bitcoin.”

He added with regards to the final SEC deadline for an spot Ethereum ETF approval in the US, “the actual date that we need to focus on is May, which probably is going to lead into such a momentum towards these highs.”

With regard to a possible price target in this bull run, the analyst revealed: “I think that at this point ETH is still going to continue running towards the area of 8K and we’re going to find ourselves into a top at that specific level.”

With respect to the 1-week ETH/BTC chart, van der Poppe remarked, “We’re seeing one crucial level that we need to break through 0.06. If we do, I think the range high at 0.0838 is going to be the target. As a matter of fact you can actually say $130 billion needs to be added towards Ethereum. It’s a rally of approximately 43%.

Van der Poppe’s second pick is Chainlink. Highlighting LINK’s technical patterns and its correlation position against BTC in the weekly chart, Van der Poppe highlighted that LINK hit resistance at 0.000448, dropped back down towards 0.0002843 and is now consolidating.

Once this is finished, he expects Chainlink “to rally towards the resistance and start breaking out of this level towards the highs at 0.0009 to 0.0010.” He added, “In terms of BTC value, it’s very likely that it’s going to do a 2x,” emphasizing the potential for significant growth.

In USDT terms, this would mean that LINK goes to $17 to $18. “From $17 to $18, you need to do 2X, which is this range high, which is this level, which we can expect Chainlink to go to before we have a pretty substantial correction in the entire market,” he added.

The analyst’s third altcoin is Arbitrum. Focusing on ARB’s recent price actions and potential for a significant rally, Van der Poppe identified key entry points, stating, “Anywhere in this ballpark between $1.67 and $1.50 is where you want to get yourself into an entry point.” He underlined the potential growth, saying, “If there’s going to be another impulse taking place, it is going to $3.50 or $5.”

At press time, the total crypto market cap stood at $1.473 trillion after being rejected at the 0.382 Fibonacci retracement level.

In a surprising turn of events, the approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) has not yielded the anticipated immediate upside impact on the Bitcoin price. 

Contrary to expectations within the crypto community, BTC has experienced a sharp drop of over 16% since the ETF approval on Wednesday, January 11, dipping below the key $40,000 level. The failure of BTC bulls to hold the support level has led to a testing phase at the $38,000 level, accompanied by a 4.5% price drop within the past 24 hours.

Bitfinex Whales Buck The Trend

Amidst the market volatility, according to Datamish, Bitfinex whales have accumulated Bitcoin long positions since November 2023. This accumulation of approximately 4,230 BTC since January 17 marks the first sustained increase in Bitfinex BTC long positions following a sharp decline in November last year. 

However, the recent downturn in the BTC price can be partly attributed to increased selling pressure from miners and asset manager Grayscale. Grayscale has notably increased its BTC sell-off since the ETF trading commenced. 

Transferring a significant amount of BTC from the Grayscale Trust address to Coinbase, totaling 69,994 BTC ($2.9 billion), has influenced the market dynamics. 

Additionally, reports indicate substantial sell-offs of Grayscale’s Bitcoin Trust GBTC shares, including a notable sale of 22 million GBTC shares by the FTX estate, worth nearly $1 billion. 

Bitcoin Liquidation Zones Wiped Off

The impact of Grayscale’s sell-off is evident in CoinGlass’ liquidation heatmap, which shows notable liquidation zones being wiped off in the 1-week chart. 

While Grayscale’s BTC dump has contributed to the price drop, the increased accumulation of BTC long positions on Bitfinex indicates a potential change in sentiment. A price reversal could occur if the $38,000 support line holds, pushing BTC back above $40,000.

Furthermore, excluding Grayscale, institutional investors and asset managers involved in the ETF market have collectively acquired over 86,320 BTC at an average price of $42,000, representing a substantial $3.63 billion investment. 

Market experts such as Ali Martinez suggest that these institutions are likely to adopt a strategic, long-term view rather than engage in peak purchases. This level of institutional investment underscores the growing recognition of Bitcoin as a legitimate asset class and signifies confidence in its long-term growth potential.

Currently, the Bitcoin price is at $38,800, reflecting a substantial year-to-date decline of over 12% and a 9.7% drop in the past seven days. The duration and extent of the selling pressure caused by Grayscale’s BTC dump remain uncertain, leaving the question of how much further the BTC price may decline.

Featured image from Shutterstock, chart from TradingView.com