Bitcoin plummeted on Friday to reach $26,166, struggling to recover beyond the $26,500 level. But what caused this?
According to the crypto market analytics platform CryptoQuant, the latest drop may be due to a coordinated FUD (fear, uncertainty, doubt) campaign against the main cryptocurrency. The campaign triggered a wave of liquidations this week.
The US Government Did Not Sell Its BTC
In a post published on Friday, CryptoQuant analyst IT Tech pointed out a wave of “coordinated fake news” related to the US government selling its Bitcoin earlier this week.
IT Tech specifically highlighted a Twitter account called Whale Chart, which he deemed “one of the worst accounts to follow” due to publishing “fake news without sources.” Whale Chart,
“Many accounts retweeted this news without any fact-checking, and as a result, we saw the second-largest long liquidations in 2023, with over $36M being liquidated within one hour,” wrote IT Tech.
The US government is currently one of the world’s largest holders of Bitcoin, having seized billions of dollars in coins related to illicit financial activity over many years. Some of those funds are related to the online darknet marketplace Silk Road, while others were connected to the 2016 Bitfinex hack – the latter of which remains the largest-ever financial seizure.
According to the on-chain data platform Glassnode, the US Government’s on-chain balance is 205,514 Bitcoin. This balance has not changed in recent days, last moving in early March when the government sold 9861 BTC seized from Silk Road, which was publicly disclosed weeks later.
CryptoQuant possesses a similar dashboard, which reports a slightly different figure for the government’s Bitcoin balance at 204, 013 BTC. However, its timing for when the government last moved its coins seems to match Glassnode’s.
Despite this, panic gripped the market on Thursday, resulting in $150 million in liquidations within one day, and $40 billion cleared from the total crypto market cap.
“Fortunately, we can verify this type of news using on-chain data,” added the analyst.
CryptoQuant is Bullish on Bitcoin
In an interview with CryptoQuant in April, representatives for the firm told CryptoPotato that institutional investors are considering investing in Q3 and Q4 of 2023, waiting for confirmation that Bitcoin has left the bear market behind.
“These are from conversations that I’ve been having mainly with institutional allocators and also people who are fundraising core funds as well,” said CryptoQuant’s Head of BD & Strategy Benjamin Brannan. “They’ve been speaking with various institutions or high net worth individuals.”
Brannan added that he doesn’t expect Bitcoin to retest its post-FTX $16,000 lows going forwards – bar a “black swan” event like “Russia blowing a nuclear weapon into Ukraine, or Binance blowing up.”
Meanwhile, Head of Marketing Ho Chan Chung claimed that Bitcoin could return to its previous all-time highs by Q2 2024.