What happened?
Stablecoin issuer Tether recently included nearly $777 million worth of Bitcoin (BTC) in its company reserves, marking the largest increase since March of this year.
The recent volatility in Bitcoin prices has reached the lowest point since breaking the $100,000 barrier. This sharp decline is primarily due to an increase in profit-taking by investors, coupled with the macroeconomic pressures on the cryptocurrency market.
Tether increased its Bitcoin holdings by $777 million in a single day, surpassing a total of 83,000 BTC.
As the price of Bitcoin (BTC) continues to rise and is expected to break historical highs in 2024, Bitcoin reserves are becoming a hot topic of discussion among global businesses and governments.
From multinational corporations to local governments, many institutions are increasingly viewing Bitcoin as a hedge against inflation, not only actively incorporating it into their balance sheets but also considering it a strategic tool for enhancing financial flexibility and stability.
Stablecoin issuer Tether has once again made a significant move, adding nearly $777 million worth of Bitcoin to its company reserves, marking the largest increase since March of this year.
According to on-chain data analysis platform Arkham Intelligence, on December 30, two transfers totaling 8,404.5 BTC were made from Tether's Bitcoin reserve wallet, with the price of Bitcoin at approximately $92,500 each.
Currently, Tether's total Bitcoin holdings have reached 83,759 BTC, with a total market value nearing $7.75 billion, maintaining its position as the third-largest corporate Bitcoin holder, behind blockchain software company Block.one, which holds 140,000 BTC, and MicroStrategy, which leads with 446,400 BTC.
Market sentiment has shifted dramatically, with the fear and greed index falling to its lowest level since October.
While Bitcoin has reached new highs this year, the recent volatility in Bitcoin prices has once again frayed the nerves of global investors.
After reaching an all-time high of $108,278 on December 17, the price of Bitcoin has been on a downward trend, dipping to $91,800 on December 30, marking the lowest point since breaking the $100,000 barrier.
As the market enters a correction phase after reaching historical highs, short-term sentiment is clearly suppressed, and the fear and greed index in the cryptocurrency market has also fallen to a two-month low. Data shows that on December 31, the index had dropped to 64, marking a new low since October 15, indicating that market sentiment has shifted from extreme greed to a more neutral position.
With the boost from President Donald Trump and several pro-crypto political figures winning elections, the fear and greed index remained above 70 for most of November and December, even peaking at 94 on November 22.
However, the recent price decline and the influx of investors into stablecoins suggest that uncertainty in the market regarding future trends is intensifying.
💡 Correction: Refers to a partial adjustment in price in the opposite direction of the main market trend without breaking it.
💡 Fear and Greed Index: Ranges from 0 to 100, with higher values indicating greater greed in the market, while lower values indicate greater fear, reflecting sentiment in the cryptocurrency market.
As of the time of writing, the price of Bitcoin stands at $92,250, down 4.13% compared to the past month.
Bitcoin is on a downward trend in the short term. What happened?
After breaking the $100,000 barrier, Bitcoin has been on a downward trend. This situation is mainly due to many investors selling their coins at the peak, combined with the impact of the global macroeconomy.
According to data from blockchain analytics company Glassnode, the recent 7-day moving average of profit-taking in the Bitcoin market exceeded $1.2 billion. Although this is low compared to the peak of $4 billion on December 11, it remains well above the historical average.
The poor performance of US economic data has added pressure to the cryptocurrency market. The uncertainty in the macroeconomy has further exacerbated investors' concerns. Factors such as weak US economic data and the Federal Reserve's monetary policy have made Bitcoin's short-term trend challenging.
For example, the Chicago Purchasing Managers' Index (PMI) indicates that local manufacturing activity has fallen to its lowest level since May, while the Federal Reserve has announced that it will pause interest rate cuts until March 2025, raising concerns about future economic growth slowing.
The Chicago Purchasing Managers' Index (PMI) reflects the health of local manufacturing, with lower values indicating weaker manufacturing activity. When this data falls to its lowest point since May, it suggests that the local economy may be slowing, with signs of weak production and demand from businesses.
On the other hand, the Federal Reserve's decision to pause interest rate cuts indicates that the current interest rate policy in the US will remain stable. Although 'maintaining stability' may not sound bad, interest rate cuts typically help stimulate economic activity.
The Federal Reserve's stance indicates that they are likely concerned that a rapid easing of policies could trigger inflation, so temporarily keeping rates high is aimed at controlling economic overheating. However, this could also slow the speed at which funds flow into the market.
For the cryptocurrency market, both of these factors have a significant impact. Various signs of economic slowdown may lead investors to be more cautious and reduce their exposure to high-risk assets (such as cryptocurrencies).
At the same time, pausing interest rate cuts means that the market's liquidity (money) will not increase, which may restrict the sources of funds for cryptocurrencies, further suppressing their short-term price performance.
Reference: cointelegraph, coindesk
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