Bitcoin saw a fresh sell-off on Jan. 21 as a surprise bearish phase swept the market despite huge institutional buy-ins.
BTC proponents brush off “Tether FUD”
The past 24 hours had proven a difficult test for support levels, with a pivotal area at $34,000 giving way to daily losses of over 8%. The downward move accompanied signs that professional traders on Coinbase were selling their positions on the spot market.
At press time, $30,000 remained intact, and with it the broad trading corridor in which Bitcoin had stayed since coming down from $42,000 all-time highs earlier this month.
On social media, commentators and traders alike were quick to brush off the short-term bearishness, arguing that skittish moves from weak hands were not indicative of overall trajectory.
“#Bitcoin is going as planned so far as the chart shows,” popular trader Michaël van de Poppe told Twitter followers.
“Corrections are healthy and heavily needed for a market to build strength and that’s what we’re seeing. [They] grant opportunities.”
Elsewhere, remarks over activities at stablecoin issuer Tether (USDT) came in for particular scorn.
Earlier this week, rumors surfaced which focused on financial services outfit Deltec, of which Tether is a client, using Tether’s funds to buy Bitcoin for others. The unsubstantiated claims further implied that the backing of USDT was once again in question.
Travis Kling, founder of crypto hedge fund Ikigai, argued that the forthcoming entry of multitrillion-dollar asset manager BlackRock into the Bitcoin arena was a far more important price trigger.
“Blackrock has $7.8 trillion under management (which is coincidentally about double what the US deficit will be in 2021) and there are still folks out here selling/shorting #Bitcoin because ‘muh Tether scam,’” he tweeted on Wednesday.
BlackRock had given permission for two of its funds to invest in Bitcoin futures markets in a landmark decision which cemented the cryptocurrency’s status as a new asset class.
Bitcoin is actually disappearing from exchanges
In addition to BlackRock’s interest and record buy-ins from crypto investment giant Grayscale this week, separate data showed that despite Thursday’s selling, Bitcoin was continuing to leave trading venues for cold storage at record rates.
“This $BTC chart might be more important than the price chart: Bitcoin supply is being withdrawn from exchanges at an all-time-high pace,” Luke Martin, host of the Coinist podcast, noted.
“Historically, bull cycles have ended AFTER liquid supply change flips positive… That flip has not happened yet.”
An accompanying chart showed that in terms of liquidity, Bitcoin could not be further from a setup which implies a sustained bearish period is due.