This week, Bitcoin (BTC) is expected to be highly volatile. An analyst noted that a 10% drop or pump wouldn’t be surprising. Early Tuesday, BTC neared $66,000, erasing last week’s gains. Sentiment dropped as a significant amount of BTC moved from US government-linked wallets, sparking fears of impending selling pressure.
Market Reactions
BTC lost up to 5% before slightly recovering in the past 24 hours. This occurred as the US Marshals Service transferred $2 billion worth of BTC to two new wallets. Tracking service Arkham suggested that one of these wallets is likely a custodial service.
Altcoins Follow Suit
Solana’s SOL led the losses among major cryptocurrencies with a 6% drop, reversing Monday’s gains. Memecoin trading on the Solana network surged over the weekend, increasing on-chain volumes over Ethereum. Other major cryptocurrencies also experienced declines. Cardano’s ADA dropped 5%, Dogecoin (DOGE) and BNB Chain’s BNB fell 4%, and XRP lost 3%. Ether showed relative strength with just a 1% decline despite $97 million in net outflows from newly launched spot ETH ETFs on Monday.
Analysts Warn of Further Losses
Market observers indicated that macroeconomic decisions and a lack of new catalysts could serve as headwinds, pushing down prices further in the near term. Alice Liu, research lead at CoinMarketCap, mentioned that the market received a boost last week in anticipation of Donald Trump’s speech at the Nashville Conference, where he was expected to discuss BTC as a strategic reserve asset.
Trump’s Pro-Bitcoin Promises
On Saturday, during the Bitcoin 2024 conference in Nashville, Republican candidate Donald Trump promised to fire SEC head Gary Gensler and create a strategic Bitcoin reserve if elected. He also stated he would be a “pro-Bitcoin” president and would not permit any of the 213,239 BTC seized by authorities and held in US government wallets to be sold. Trump declared that the US would become the world’s cryptocurrency capital.
Future Volatility Ahead
Liu warned that interest rate decisions from the Bank of Japan, Federal Reserve, and the Bank of England on Wednesday and Thursday could further increase volatility in the crypto market. The peak of optimism on the 27th led to a “sell the news” phase, and there is currently no new source of optimism in the market.
