Bitcoin’s Flash Crash: The Calm Before the Storm?
Exchange Inflows Grow. BTC/USD Hits Major Support Zone.
Bitcoin underwent a flash crash on July 24, with its value taking a dive to $29,000. This downturn is believed to be due to Bitcoin whales possibly offloading their stakes.
Glassnode, a blockchain analytics company, disclosed a peak in whales’ deposits to exchanges, marking a three-year high at 41% of the overall BTC inflows. This aggressive move made by whales is rather concerning, especially since there weren’t any major negative occurrences affecting Bitcoin over the previous month. Usually, when whales move their digital assets to exchanges, they do so with the intent of selling. When they don’t intend to sell, they simply keep their assets in their personal wallets
Some worry is also arising from the ongoing lawsuits against major exchanges Binance and Coinbase, initiated by the United States Securities and Exchange Commission. However, these cases have not seen much progress and are expected to take years to resolve.
Later in the week, Bitcoin showed a slight upward trend following the Federal Reserve’s decision to raise interest rates to their highest since 2001 – a decision already anticipated by the markets. In a subsequent press statement, the FOMC hinted at readiness to use additional measures should obstacles arise in their journey toward achieving a 2% inflation rate.
Despite elevating rates to a 22-year apex, the move was largely anticipated across markets with an almost 99% certainty. As a result, the reaction on charts was rather tame.
The U.S. Advance GDP figures for Q2 surpassed predictions at an annualized 2.4%, suggesting a continued decline in inflationary pressures, which could act as a stimulant for risk asset performance. However, this news didn’t significantly influence Bitcoin’s behavior.
Presently, Bitcoin seems to be on the verge of a major shift, having been in a tight range for more than a month, with unusually low volatility. This quiet period is suggestive of a significant movement on the horizon.
Chart Analysis – BTC/USD
Bitcoin has been uncommonly quiet for the last month. Except for a couple of days here and there, the otherwise spirited digital king has been almost asleep, lacking a clear direction.
We can say that the support at $30,000 is clearly broken now but the behavior after the break is interesting. Usually, after a period of trading in a tight range (in this case $30,000 to $31,500), the asset breaks out and continues strongly in that direction. But after the sell-off seen Monday, Bitcoin just resumed its slumber. So, is there more to come? Probably.
The main thing to watch is how BTC/USD reacts at the 50-day Moving Average, where it’s currently at. The RSI is going down, without being oversold, so there is still room for downward movement. Unless we see a bounce at the 50 MA, Bitcoin is likely to fall into the support at $28,500.
