Political backing for crypto fades as prices tumble

In a week where an OG whale sold $1.3 billion worth of Bitcoin, and spot ETFs tracking the king crypto saw $1.21 billion of net outflows, whales and politicians may be turning away from the market that the US administration pushed to all-time highs about a year ago.

According to data from Arkham Intelligence, a long-term Bitcoin whale named Owen Gunden sold all of his 11,000 Bitcoins in several transactions, with the final tranche valued at $230 million executed on the Kraken exchange on Thursday.

Looking at Bitcoin’s price chart on CoinGecko, the sale just came before a red candle that wiped $5,000 off the king coin’s value during the day. Redditors argue Gunden’s sale caused a “natural” depression of prices due to the sudden increase in available supply, and it is an unequivocal sign bears are having their say.

“I mean, if the price action isn’t already enough to convince you, that’s $1.3 billion of selling pressure in the space of a few weeks… from just one guy,” said one user on the r/Bitcoin subreddit.

Bitcoin institutional holders sell, ETFs record outflows

Earlier this week, Arkham spotted Marathon Digital Holdings, now known as MARA, offloading more than 648 BTC worth $59 million at the time onto Coinbase Prime and FalconX brokerage platforms. The company’s willingness to release holdings during a time when the overall market sentiment is in fear is doing further damage to the hopes of maxis.

In the seven days starting November 14 to November 21, Bitcoin has dropped by an additional 12.1%, hitting its lowest point in seven and a half months. The cryptocurrency briefly fell below $82,000 during US Friday trading sessions, before tracing its way back to $84,700. 

US spot Bitcoin ETFs saw a net outflow of $1.5 billion from November 17 to November 20, but Friday recorded $238 million in net inflows, led by Fidelity’s FBTC at $108 million. The weekly loss totaled more than $1.2 billion, the largest since February. 

Spot Ether ETFs also experienced inflows of $55.71 million, ending an eight-day streak of outflows, but this was just a small patch to a wound that bled out over $555 million since Monday.

US Federal Reserve policy uncertainty is not helping

The United States crypto market is closely watching the Federal Reserve ahead of its December meeting, trying to find meaning in all the speculation over possible changes to the key interest rate. 

September labor data revealed the addition of 119,000 non-agricultural jobs, surpassing forecasts and suggesting a reduced likelihood of a rate cut. However, unemployment jumped to a four-year high of 4.4%, supporting arguments for monetary easing.

According to market watchers, the uncertainty could discourage investors from borrowing and risk-taking, nuking the investment appetite in crypto. Until the direction of US monetary policy becomes clearer, Bitcoin and other digital assets may likely continue to struggle.

Liquidity on the low, US Treasury yields dwindling down

As reported by Cryptopolitan on Saturday, the US Treasury has altered its debt structure by buying back its debt, favoring short-term bills over longer-term notes and bonds. The Federal Reserve has reduced purchases of long-term securities, which has left private investors to absorb more of these instruments.

Ten-year Treasury notes now yield 4.06%, while thirty-year bonds have dropped to 4.71%. Compared with pre-pandemic levels below 1%, such yields make traditional securities more attractive than assets like Bitcoin. 

Ryan Lee, chief analyst at Bitget Research, said that when Bitcoin’s value fell, traders faced liquidations that may cause them to run away from markets, unless the Fed makes a “bullish” decision in December.

Lee suggested that consumer spending in the United States during the post-Thanksgiving period leading up to Christmas, could provide temporary support. However, he also cautioned that the traditional “Santa Claus Rally” may not materialize in 2025, owing to the confluence of a bearish looking crypto market and uncertainty on monetary policy.

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