Why is Bitcoin on the Decline? Here is a Possible Reason
The Crypto market experienced a massive fall on August 12th, 2024, with Bitcoin shedding 4.5% of its value
The cryptocurrency market experienced a significant downturn on August 12th, 2024, with Bitcoin (BTC) shedding 4.5% of its value. The decline has sparked speculation about the reasons behind this sudden drop, with a particular focus on the role of institutional investors.
Recent observations suggest that institutional activity in the Bitcoin market has significantly decreased, raising concerns about potential market instability.
Data reveals a noticeable slowdown in the transfer of USDT (Tether) from TetherTreasury to exchanges, a pattern that began two days before the market dip. This cessation of USDT inflow, which traditionally signals institutional buying, has led to concerns about a potential shift in institutional sentiment.
Institutions Slowdown Impacted Bitcoin Prices
However, it is important to note that a $122 million deposit to Bitfinex, an exchange closely linked to Tether, was recorded just one hour before this article’s publication. This deposit may indicate that institutional activity is not absent but is experiencing a temporary lull.
The slowdown is attributed to lower liquidity over the weekend, often characterized by reduced trading volumes.
Furthermore, it is crucial to consider the broader context of recent market events. The cryptocurrency market experienced a significant crash on August 5th, leading to a substantial withdrawal of USDT from TetherTreasury to exchanges, amounting to 1.3 billion USDT.
This influx of USDT, intended for buying Bitcoin, ultimately failed to prevent the market crash, potentially contributing to the current subdued institutional appetite.
The role of Celsius, a cryptocurrency lending platform, in the recent market downturn has also been scrutinized. The platform’s involvement in two consecutive bull market crashes raises questions about its impact on market stability and institutional confidence.
“While the current market downturn and the slowdown in institutional activity may seem alarming, it is important to adopt a measured perspective,” says an X user.
On August 1st, 2024, the market dynamics significantly impacted Bitcoin’s price trajectory. Within the past two hours, Bitcoin has experienced a substantial 6.4% increase in price, surpassing its previous high of $56,000. The surge reflects renewed optimism among investors.
