Crypto Market Under Pressure as Bitcoin Drops, Whales Exit: Is a Crash Coming?

After a strong Monday led by Bitcoin (BTC), the total cryptocurrency market cap fell by more than 2 percent, hovering around $2.5 trillion on Tuesday. Bitcoin’s price dropped nearly 5 percent in the last 24 hours, trading at about $66,392 during early Tuesday trading.

This price drop led to over $174 million being liquidated from the crypto derivatives market, mostly involving long traders. This significant sell-off highlights the increased volatility and risks in the crypto market.

Here’s everything we know.

Are the Whales Panicking?

Fears of a potential crypto correction in August, reflected by a drop in Bitcoin’s fear and greed index, have prompted whale investors to make notable changes. On Monday, US spot Bitcoin ETFs saw a net cash outflow of about $81.49 million, led by Grayscale’s GBTC. None of the spot Bitcoin ETF issuers recorded a net cash inflow that day.

In a surprising move, the US government transferred nearly 30,000 Bitcoins, worth about $2 billion, to two different addresses on Monday. This action follows former President Donald Trump’s weekend pledge to protect the Bitcoin and crypto industry, including a promise never to sell the country’s BTC holdings.

Political Suicide?

The Biden administration has faced criticism for its stance against the crypto industry. The recent transfer of US Bitcoin holdings has sparked fears of selling pressure similar to the $2 billion sales by the German government.

With President Biden out of the 2024 presidential race, Democratic candidate Kamala Harris is reportedly considering Michigan Senator Gary Peters as her running mate. Peters, an anti-crypto lawmaker, co-sponsored the Digital Asset Money Laundering Act in 2023, raising concerns among crypto-affiliated voters, who are estimated to number over 50 million in the US.

Prepare for the FOMC Statements!

The crypto market, led by Bitcoin, is expected to see increased volatility in the coming days, especially with the upcoming FOMC statements on August 1. Technically, Bitcoin’s price has formed a potential reversal pattern, indicated by a daily double top and a bearish divergence on the Relative Strength Index (RSI).

Future Outlook

If crypto bulls lose control, Bitcoin’s price could drop to as low as $60,000 in the coming weeks before potentially rebounding to a new all-time high. Investors should prepare for a turbulent period as market dynamics continue to evolve.

With the FOMC meeting looming, the crypto world holds its breath. The future of Bitcoin and the broader crypto market remains shrouded in uncertainty.