The situation today is favorable for cryptocurrencies, thanks to the ECB (European Central Bank) cutting interest rates by 25 basis points.
This is the second cut in 2024, and it is a clear signal that President Christine Lagarde wants to send to international markets.
Bitcoin is also flying , gaining more than +3% and returning close to $58,000, which it had also surpassed in the morning but which was followed by a retracement up to $57,629 at the time of writing, according to data from CoinMarketCap.
US inflation falls
Incidentally, the latest inflation data in the United States also suggest that the Federal Reserve may cut interest rates.
The annual increase in inflation in August slowed to 2.5% (from 2.9% in July), the lowest level since March 2021. This trend is in line with the Fed’s 2% target and raises the likelihood of a more accommodative monetary policy.
To find out, we will have to wait until September 18th, when Jerome Powell will decide on this date (around 8:00 PM in Italy) whether and by how much to cut interest rates in the US.
Is Bitcoin Suffering a Structural Decline?
What is worrying is not the economic situation, which is expected to be positive both in Europe and in the United States, but the activity of the BTC Blockchain which appears to be in sharp decline.
According to the latest data, Bitcoin whale activity has declined significantly since the cryptocurrency hit its yearly high in March.
In a recent post on X , blockchain analytics platform Santiment revealed that large Bitcoin transactions, typically $100,000 and up, have dropped 33.6% since March 13, which coincides with Bitcoin’s all-time high of $73,679.
🐳 Cryptocurrency's whale transactions have seen a noticeable drop-off since mid-August
🪙 Bitcoin: -33.6% drop in $100K+ transfers since March/April peak
🪙 Ethereum: -72.5% drop in $100K+ transfers since March/April peakThis isn't necessarily a bearish signal. Whales can be… pic.twitter.com/iGNRt2roPL
— Santiment (@santimentfeed) September 11, 2024
Declining whale activity is not a bearish signal
Slowing activity among major Bitcoin holders, often referred to as “whales,” is not necessarily a bearish sign, Santiment suggests.
These whales, defined as wallets holding at least 10,000 BTC, are known for their influence on market movements. They tend to be active in both bull and bear markets, often waiting for key periods, such as rising fear or greed, to make significant moves.
In the report, Santiment noted that the decline in whale activity has also occurred for Ethereum (ETH), with large transactions plummeting 72.5% since mid-March.
Despite these declines, Santiment stressed that these trends do not necessarily signal a downturn but could indicate that these large operators are waiting for new opportunities, carefully monitoring the market.
Currently, the cryptocurrency market sentiment is leaning towards fear. The Crypto Fear & Greed Index, which measures market sentiment on a scale of 0 (extreme fear) to 100 (extreme greed), has a score of 31, indicating that fear is prevalent.
Historically, investors have viewed fear-ridden markets as potential buying opportunities, as prices tend to be lower during these times.
Although Bitcoin has seen a slight decline of 0.97% since mid-August, trading around $58,360, some analysts believe the asset could face further downward pressure.
Markus Thielen, head of research at 10x Research, predicted in early August that Bitcoin could drop into the low $40,000 range before repositioning itself for the next bull market.
Santiment also suggested that if Bitcoin were to drop to $45,000 it could unleash a wave of fear, uncertainty, and doubt (FUD) in the market.
However, if the cryptocurrency were to bounce back to around $70,000, it could trigger fear of missing out (FOMO) among investors.
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