Key Points
- Bitcoin’s early-August decline may set the stage for a bullish end to the year.
- Bitcoin whales have increased their holdings by over 404,000 tokens in the last 30 days.
The market dip on August 5 resulted in a reversal of Bitcoin’s funding rate for margin positions, which could pave the way for a positive fourth quarter.
A CryptoQuant analyst, known as ShayanBTC, suggested that the early-August slump in Bitcoin’s value could ultimately benefit the digital asset before the year is out. The drop to $49,000 led to a significant deleveraging, clearing almost $1 billion in Bitcoin longs. This downturn also wiped out more than $1.2 billion in crypto margin positions and set funding rates back to negative.
Market Dynamics
The outcome was a dominance of short sellers in leveraged positions. According to the CryptoQuant analyst, this could be seen as a positive development, indicating that future markets are no longer overheated.
Despite the downturn, “Smart Money” maintained a positive outlook on the markets. Bitcoin whales increased their holdings by over 404,000 tokens in the past 30 days, following the brief rise to $70,000 and subsequent drop below $50,000. Data from CryptoQuant showed that this accumulation spree coincided with several liquidation events.
Market Predictions
The addition of Bitcoin to investors’ portfolios is generally a bullish signal for the cryptocurrency, indicating strong market sentiment among long-term investors. This is particularly the case when funding rates have fallen, creating more space for upward momentum.
However, while whales have been purchasing more Bitcoin, analysts at Bitfinex predicted on August 5 that the token could retest support around $48,900 before making a move towards all-time highs again.
Historical data supports this assertion, showing that Bitcoin typically struggles in August and September. Any gains made in July were erased by market fear driven by macro factors. However, the fourth quarter could bring some relief for Bitcoin.
Before global markets pulled back, there were widespread expectations of Federal Reserve rate cuts in September. A dovish outcome at the Federal Open Market Committee meeting next month could inject much-needed liquidity into the crypto market and drive prices upwards.
