How Did Institutional Investors React to the Recent Drop in Bitcoin?
A sudden wave of selling in the cryptocurrency market has led to a sharp decline in Bitcoin's value, while the rise of Coinbase (COIN) Premium is seen as a noteworthy development. According to blockchain analysis platform CryptoQuant, this situation indicates a shift in market dynamics. As Bitcoin loses value, the increase in Coinbase Premium signals strong purchasing by institutional investors.
Coinbase Premium measures the price difference of Bitcoin between Coinbase Pro and Binance. A high premium suggests increased buying demand, especially from U.S. investors. Coinbase Premium, which has shown negative values in the past, has rebounded during Bitcoin price declines, rising in response to aggressive reactions from institutional investors.
Increased selling pressure in the crypto market The cryptocurrency market faced a significant wave of selling at the beginning of the week. Bitcoin fell from $104,000 to $94,220, resulting in $1.6 billion in liquidations over the last 24 hours. The total market value of cryptocurrencies decreased by more than $200 billion, falling to $3.47 trillion with a decline of 3.73%.
Major cryptocurrencies such as Ethereum and Dogecoin were also affected by this downturn. According to CoinGlass, over $1.39 billion in long positions were liquidated, marking the largest liquidation event since 2021. Despite the overall drop, the sharp increase in Coinbase Premium indicates that U.S. institutional investors still have confidence in Bitcoin’s potential.
Bitcoin testing short-term support levels Recent declines in Bitcoin's value have begun to test short-term support levels. Bitcoin has found support around $96,000, while analysts are focusing on expectations for a new recovery towards $100,000. However, these declines became inevitable as Bitcoin's MVRV ratio reached historical levels.
On the other hand, Google's (GOOGL) newly launched Willow chip in the field of quantum computing raises concerns about cryptocurrency security. Notable Bitcoin analyst Peter Brandt has pointed out that quantum computing could pose an existential threat to Bitcoin, as there are those who believe this technology threatens the encryption systems of cryptocurrencies. However, some commentators argue that current quantum computers have high error rates in practice and do not pose a significant threat to Bitcoin's security.