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Bitcoin Holds Strong at $26.4K, Despite Potential Sell-Offs Amid Weekly Gains

Sep 16, 2023 at 03:38 pm

Bitcoin, the world's largest cryptocurrency, has seen a rebound after hitting a three-month low below $25,000 earlier in the week.

Currently trading at around $26,300, Bitcoin is up about 2% from its levels a week ago in U.S. trading hours.

The week started with significant losses, with Bitcoin dropping below $25,000 for the first time since mid-June. This decline was attributed to concerns that the bankrupt crypto exchange FTX might start selling off all of its digital assets, including over $500 million worth of Bitcoin.

While FTX has gained court approval to initiate the selling process, it is expected to occur at a controlled pace and is unlikely to lead to rapid declines in the crypto markets.

A potential crash in Bitcoin's (BTC) price has been avoided, yet the trend of selling off during rallies persists.

One notable trend in the crypto space over the past four months has been the swiftness with which even minor upward movements are reversed.

FTX's recent news highlights that while there may not currently be entities interested in a large-scale liquidation of digital assets, there are still plenty of sellers ready to capitalize on any rallies.

This includes impaired trading firms, lenders, exchanges, and even Bitcoin miners, many of whom, just a year ago, were steadfast "hodlers" but are now compelled to sell a portion of their Bitcoin holdings each month to cover operational expenses.

Despite this selling pressure, positive news this week about asset management giant Franklin Templeton entering the race to list a spot Bitcoin exchange-traded fund (ETF) and Deutsche Bank's further foray into digital asset custody and tokenization may provide support to prices. Crypto service provider Matrixport suggests that Monday's breakdown could be a misleading signal.
Data by MatrixportData by Matrixport

Rachel Lin, CEO of derivatives decentralized exchange SynFutures, sees Bitcoin's reclaiming of its previous trading range and consolidation at these levels as a promising sign in the short term, especially if it remains above $26,000 by the end of the week.

Altcoins signal weakness

While Bitcoin shows resilience, the broader market indicates signs of weakness. The Bitsday Market Index (BMI) registered a modest 0.8% gain over the past week, whereas the Bitsday Bitcoin Price Index (XBX) outperformed with a 1.7% increase.

Among the sectorial indices, Culture and Entertainment (CNE) suffered the most, with a 3.2% loss in the week, followed by the DeFi sector (DCF) with a 1.6% decline.

Apecoin (APE) was one of the notable losers of the week, dropping nearly 18%. This drop precedes a major token unlock event scheduled for the coming Sunday, which will release $43 million worth of tokens, providing early investors an opportunity to sell.

Matrixport suggests that strategically selling altcoins, particularly those with event-related risks like ApeCoin, while holding onto Bitcoin, has the potential to yield significant returns.

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