- The discussion about cryptocurrencies plummeted as prices fell
- Whales are buying the BTC dip, but others are continuing to sell ETH
Until January 22nd is Bitcoin’s [BTC] price remained above $40,000. Ethereum [ETH]so far, also changed hands above $2,400.
But the past 24 hours have been catastrophic for the two largest cryptocurrencies. BTC fell 3.00%, while the value of ETH fell 3.59% during the same period. As a result of the decrease, conversations around the project ceased.
What are the reasons behind the market decline?
The catalyst for the carnage remains the cash flows from Grayscale Bitcoin Trust, formerly Grayscale Bitcoin Trust (GBTC). According to AMBCrypto’s analysis of CryptoQuant data, 14,291 Bitcoins flew out of the fund on January 22, amounting to $570 million at current market prices.
Since the launch of the ETF, Grayscale’s on-chain balance has fallen by 66,000 BTCs, most of which are being liquidated on the secondary market.
There is also a lot of negativity. Using the Social Volume screen on Santiment, AMBCrypto found that discussions about ETH dropped 21% compared to when the SEC approved Bitcoin spot ETFs. For BTC it was a drop of 35%.
#Bitcoin briefly fell below $40,000 for the first time since December 4. Monday was a bloodbath for most of them #crypto sector. It is striking that there is 35% less discussion about it $BTC and 21% less direction $ETH compared to the previous one #ETF approval week. #FUD is
(Continued)
pic.twitter.com/iievb8mbHJ
— Santiment (@santimentfeed) January 22, 2024
Apart from the decline in the number of posts related to these cryptos, the drop also meant that traders refrained from jumping on the price movements.
Previously, AMBCrypto had assessed Bitcoin’s chances of falling below $40,000 before the end of January. In the article we mentioned how it was possible. But the speed at which it happened was something unexpected.
Down before the next “up only”
However, the pullback could be a necessary correction that Bitcoin and Ethereum need for higher resilience. In any case, there is a good chance that recovery will not occur quickly, as further declines may be on the way.
One of the reasons for the potential recovery could be related to weighted sentiment. At the time of writing, Bitcoin’s weighted sentiment had dropped to 0.359.
On the other hand, the benchmark on ETH’s side also fell to -0.803.
Weighted sentiment measures the positive/negative comments about an item. Thus, the drop into the negative region suggests that the average perception around ETH and BTC was not optimistic.
Source: Santiment
But in terms of the price action, this drop could foreshadow higher value for the cryptocurrencies. For example, on November 3, 2023, Bitcoin’s price closed at $38,688.
At that time, the weighted sentiment was approximately the same value as at the time of writing.
On the same day, the price of ETH was $2,052, and the benchmark was also negative. Fast forward to December 5, Bitcoin’s price was $44,080, while ETH was $2,293.
Big investors want a discount
In addition to this period, there are also several copies of the same movement. Therefore, there is a chance that when the upswing comes, BTC and ETH could rise higher above USD 49,000 and USD 2,700 respectively.
In the meantime, some market participants appear to be taking action toward a possible rebound.
According to AMBCrypto’s review of Spot On Chain data, a whale purchased $1.03 million in BTC dip just before it fell below $40,000.
Another whale bought $600,000 worth of the coin as the price continued to decline. However, ETH has not yet enjoyed that goodwill as it appears to be undergoing a large-scale sell-off.
Realistic or not, here is the market cap of ETH in terms of BTC
For example, the Ethereum Foundation recently sold. Additionally, Alameda Research and Celsius Network have moved some of the ETH to Centralized Exchanges (CEXs).
If this is in place, BTC could rebound much faster than ETH unless the whales decide to add ETH to the buying wave.
