$3B Crypto Sell-Off Looms, Could Tank The Market, Predicts Analytics Firm

Zinger Key Points
  • Grayscale's Ethereum fund is soaring, hinting at a possible transition into an ETF soon.
  • Complex market dynamics may persist with big sellers entering the scene later this year.

An analytics firm has raised concerns over a potential $3 billion sell-off in the cryptocurrency market.

This anticipated liquidation event, linked to FTX's upcoming offloading of vast crypto holdings, could significantly impact market dynamics.

The anticipation of this massive liquidation by IntoTheBlock came amidst a backdrop of various notable events in the crypto space.

Traditional finance institutions have been progressively making strides to introduce crypto-based products. A notable example is Grayscale, which has the Grayscale Bitcoin Trust GBTC, and its recent triumph of getting closer to establishing a spot Bitcoin ETF, closely followed by Cathie Wood's ARK Invest filing to introduce the first spot Ethereum ETH/USD ETF.

This product aims to bolster investments in Ethererum the second-largest crypto asset.

But even such significant announcements didn't induce any substantial movement in Ethereum's price during the past week.

IntoTheBlock's report delved deeper into this lack of market reaction.

Analyzing the Ethereum Spot ETF, the research noticed an intriguing divergence.

While Grayscale Ethereum Trust ETHE is nearing its annual peak, Ethereum's value depreciated by over 20%. This variance demands a closer look, considering the intricate market factors currently in play.

Several elements contributed to the market's current stance.

Ethereum's price is being held within a tight range due to a substantial concentration of holdings close to its current value.

Approximately 5.1 million Ethereum were previously secured in the low $1,600s, acting as significant support. On the flip side, about 6.5 million Ethereum were bought at a higher price in the $1,600s.

Also Read: Coinbase CEO: Flatcoins Are 'New Thing On Horizon' To Revolutionize Crypto World

This concentration resulted in a consolidation, with both buyers and sellers transacting within this close range.

Interestingly, the announcement of a potential Ethereum spot ETF wasn't the sole event that failed to shake the market. Visa's V recent declaration to utilize Solana SOL/USD for swifter and more economical settlements followed a similar trend.

Solana's price experienced an uptick post-announcement but soon retraced its steps, much like Ethereum

The report suggested trading bots may be automating the buying process during these announcements. But the trend is quickly overshadowed by discretionary sellers. A prime motivator for this discretionary selling is presumably the upcoming FTX liquidation.

Given the nuances and multifaceted nature of the crypto market, it remains challenging to pinpoint precise drivers behind price movements.

Nonetheless, it appeared that buying sprees, triggered by catalysts like the potential Ethereum spot ETF, are counterbalanced by the impending FTX sell-off.

This intricate interplay is set to continue, as other major sellers are expected to enter the market later this year.

At the same time, institutional triggers and organic adoption show promising growth.

To further understand these complex market dynamics and the future of digital assets, Benzinga's Future of Digital Assets conference, scheduled for Nov. 14, is an event not to be missed.

Read Next: India Pivots On Crypto After Reviewing G20 Proposal, Secretary Of Economic Affairs Says

Meet and engage with transformative Digital Asset and Crypto business leaders and investors at Benzinga's exclusive event - Future of Digital Assets. Tickets are flying: Get yours!

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: CryptocurrencyNewsMarketsBlockchain TechnologyCrypto Holdingscrypto marketFTXInstitutional Investors
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!