Bitcoin's big loss, whale buying, and catalysts for it to move higher

Bitcoin's Price Plunge and Bear Market Concerns [00:00]

• Bitcoin has experienced a significant price drop, briefly falling below the $100,000 level.
• 10x Research, a Singapore-based firm, had previously predicted Bitcoin prices would fall to the $100,000 level.
• The firm's researcher suggests that due to deleveraging and selling pressure from "whales" (large holders) since summer, important technical levels for Bitcoin have been breached.
• 10x Research predicts Bitcoin could go even lower in the near term, possibly not having seen a bottom yet.
• If Bitcoin breaks below the $93,000 level, it could enter an "air pocket" and potentially fall into the $70,000s.
• This is happening despite this week being Bitcoin's worst week since March, with a decline of 9%.

"So what this firm is predicting is that you could see Bitcoin going even lower in the near term."

Factors Driving the Crypto Selloff [01:44]

• Long-term holders ("OGs") have been selling Bitcoin since the summer, with an acceleration of this selling over the last month.
• This selling pressure has weighed on the market.
• A significant liquidation event occurred on October 10th, which breached important technical levels and also liquidated some smaller investors.
• 10x Research views the current situation as the Bitcoin industry being in a bear market, though they do not expect it to last as long as the one in 2021.
• Technically, it's considered a bear market as it's off 20% from its all-time high reached about a month prior.
• If the $93,000 level is broken, an air pocket could form, potentially leading to further declines into the $70,000 range.
• Fund managers who have been buying Bitcoin ETFs might be forced to sell if prices continue to fall, questioning the rationale for holding a long position in falling ETFs.

"So what this firm is saying is is that their base case is that the Bitcoin uh industry is now in a a bare market."

Potential Catalysts for a Market Turnaround [03:20]

• Several catalysts could potentially turn the market around and drive Bitcoin higher.
• These include the Federal Reserve deciding to cut interest rates in December.
• A regime change at the Fed heading into next year could also be a positive factor.
• The government reopening after a shutdown is another potential tailwind for the crypto market.
• Despite these potential positive factors, there is significant pressure currently being observed in the crypto market overall.

"So there are catalysts that could turn things around, but not but right now we are seeing quite a bit of pressure in the crypto market in general."

The Impact of "Whale Selling" on Bitcoin [03:55]

• Analysts are pointing to "whale selling" as a key catalyst for the current market slowdown.
• Whale selling refers to long-term holders who possess large amounts of Bitcoin selling their holdings.
• Strategists estimate that 400,000 Bitcoin have been sold by long-term holders over the past month, according to 10x Research.
• Compass Point has noted that net sales from long-term holders have exceeded 1 million Bitcoin since June 30th.
• This significant volume of selling, especially during a period of high volatility, has put pressure on the market.
• The question remains whether the market has capitulated or if further downside is expected before a potential recovery.

"Yeah, this is long-term holders that hold a large amount of Bitcoin and we've seen that there's been whale selling which has put pressure on the market."

Historical Performance and Seasonal Trends [05:09]

• The recent market movements have been concerning, particularly given that this period is typically a seasonally strong time for Bitcoin.
• October was expected to be a strong month, but this past month was the first time Bitcoin did not perform well since 2018.
• In 2018, after a decline in October, Bitcoin subsequently fell by about 37% in November.
• The underperformance in October therefore does not bode well for the current month.
• There are risks in the background, including the government shutdown and more hawkish commentary from the Fed, which could contribute to further downside.

"This was the first time that last October or this past month was the first time that uh Bitcoin did not perform well since 2018."

Support Levels and Potential Upside Catalysts [06:03]

• Some analysts are questioning if a leg lower might occur before a potential rise.
• Compass Point is suggesting that $95,000, or just above it, would serve as support.
• A strategist from Compass Point does not see any immediate near-term catalysts for an upside move.
• However, there are potential catalysts that could send Bitcoin higher, including a tailwind of liquidity.
• The Treasury General Account not being drawn on due to the government shutdown has negatively impacted liquidity and Bitcoin.
• A government reopening soon would be a positive tailwind for Bitcoin.
• If strategy shifts to the S&P 500, this could also provide a tailwind.
• Legislation being considered in Congress could also act as a positive catalyst.
• The main question is the timing of these potential catalysts.

"Uh but there are catalysts which could send Bitcoin to the upside and that would be the tailwind of liquidity."

Broad Market Selloff and Risk-On Environment Shift [07:04]

• The crypto selloff is continuing and is not limited to Bitcoin; it's affecting the entire market.
• Bitcoin is down about 20% from its highs, and a broad selloff is evident across cryptocurrencies.
• The cryptocurrency heat map is predominantly in the red, with Bitcoin down nearly 4%, Ethereum down nearly 6%, and Solana down nearly 9% on a single morning.
• This follows a substantial run-up, especially for Bitcoin, which is up about 9.5% year-to-date.
• Investors had flocked to crypto during the summer months when the market was near record highs, willing to take on risk.
• Ethereum, in particular, experienced strong months from June through September.
• Currently, there is a sense of fear, not only concerning valuations but also due to the government shutdown and the potential for the Fed not to cut interest rates in December.
• This indicates a slight shift away from the risk-on environment observed over the summer.
• Bitcoin has moved closer to the $100,000 threshold, significantly down from its record highs of $120,000 just the previous month (September).
• The decline over the last month, approximately 15%, has been interesting to observe.

"And so it's been interesting to watch this sort of decline especially over the last month down about 15% percent."