Markets
Here’s why the price of Bitcoin (BTC) is dissociating from the Nasdaq
Bitcoin (BTC) fell more than 6% in seven days, deviating from its usually positive correlation with the stock market’s tech-heavy Nasdaq Composite Index.
While the popular narrative attributes Bitcoin’s fall to the Federal Reserve’s decision to signal a single interest rate cut in the United States For the rest of the year, tech stocks extended gains after Wednesday’s decision, indicating that crypto-specific factors could prevent BTC from keeping pace with the Nasdaq.
“When a market continues to sell at a specific level, it has less to do with events, narratives or fundamentals. Instead, a large seller perceives prices as overvalued at that level,” said Markus Thielen , founder of 10x Research. . “The all-time high of nearly 70,000 reached in November 2021 is a level where long-term holders are willing to sell their Bitcoins, as they are the most likely candidates to cash out.”
Earlier this week, a wallet inactive since 2018 moved 8,000 BTC worth over $500 million for crypto exchange Binance. Switching from a wallet to an exchange is often a signal of an impending sale. The wallet reportedly acquired the BTC for less than $4,000.
Data tracked by analytics firm CryptoQuant shows the number of BTC inactive for at least 12 months and two years has declined, a sign that holders have been making profits as the price of Bitcoin remains near record highs.
“Addresses whose supply has been inactive for 1 and 2 years have been selling since the price reached a record level. This compensates for the accumulation by longer-term holders (+ 3 years)”, Ilan Solot, co- head of digital assets at Marex Solutions, said in an email Wednesday.
According to Thielen, 1.8 million BTC have not moved in over a decade, potentially including the 1.1 million BTC mined by Satoshi himself. “This is why we also expect most Mt. Gox holders to convert their BTC to fiat once they take possession of their BTC in October/November 2024,” noted Thielen.
Mt. Gox, a crypto exchange that imploded due to a hack in 2014, is prepares to distribute 142,000 bitcoins (BTC) worth around $9.5 billion and 143,000 bitcoins in cash (BCH) worth $73 million to creditors, CoinDesk reported in April. A distribution could have a significant impact on digital asset prices. The administrators of the defunct stock exchange last year together a deadline of October 31, 2024 to repay creditors.
Another reason for BTC price weakness could be increased sales by miners or those responsible for manufacturing the coins. Miners receive BTC as a reward for approving blocks on the blockchain and additional revenue from user transaction fees.
Listed miner Marathon Digital (MARA) has sold 1,400 bitcoins worth $98 million this month. According to CryptoQuant, miners sold at least 1,200 BTC on June 10 via over-the-counter windows, the highest daily volume in over two months.
The hashrate, or computing power dedicated to the Bitcoin blockchain, increased from 622 exahashes per second (EH/s) to 599 EH/s this month. It is a sign of capitulation of the miners.