Bitcoin Sinks as SpaceX Reportedly Sells Holdings, Sending Crypto Market into Panic
Bitcoin faced a major setback as its price plunged significantly following reports of SpaceX’s alleged sale of its bitcoin holdings. The Wall Street Journal reported that Elon Musk’s SpaceX had written down the value of its bitcoin assets by $373 million in 2020 and 2021 and subsequently sold the cryptocurrency. Although no concrete evidence supporting this claim has emerged, it seems that fear-based selling triggered a cascade of liquidations in the crypto market, resulting in a sharp decline.
The price of bitcoin ended the day at $26,059.65, down 6.58%, according to Coin Metrics. This decline caused a ripple effect across the entire crypto market, with other popular cryptocurrencies also experiencing losses. Ether and Binance coin dropped by approximately 4%, while Cardano’s ada lost over 3%. Ripple’s XRP saw a significant slide of 13%, and the Solana token was down 7%.
This latest dip in bitcoin’s price marks its seventh weekly loss in the past eight weeks, making it the cryptocurrency’s worst performance since May. Coin Metrics measures a week in crypto from the 4:00 p.m. ET stock market close on one Friday to the next.
The news of SpaceX’s alleged sale added to the existing pressure faced by the cryptocurrency market, which has been affected by a worsening macroeconomic climate and the collapse of industry giants such as FTX and Terra. Since the beginning of the year, bitcoin has faced challenges and has been relatively stagnant during the third quarter, historically a weak period for the cryptocurrency. It is now down 14.25% for the quarter and approximately 10.69% for August. However, despite recent market softness, bitcoin is still up around 57% for the year.
It appears that the selloff was largely driven by fear stemming from the headlines regarding SpaceX’s alleged sale of bitcoin assets, said Darius Tabatabai, co-founder at decentralized exchange Vertex Protocol. Although no proof has been presented, the combination of thin summer liquidity and downward gaps in prices led to cascading liquidations in derivatives markets, exacerbating the drop, similar to panic selling episodes we’ve witnessed before.
Tabatabai added, Currently, we’re observing negative funding rates for perpetual futures, which may indicate bearish momentum for the time being. However, given the speed and intensity of this downturn, the situation could quickly reverse.
While this recent slump has caused concerns among crypto investors, it is worth noting that bitcoin still holds a substantial gain of about 57% since the beginning of the year. The future trajectory of the cryptocurrency will be closely watched, as investors and analysts keep a keen eye on market developments and potential catalysts for a rebound.
In conclusion, bitcoin’s price tumbled following reports of SpaceX’s alleged sale of its bitcoin holdings, adding to the existing pressure on the cryptocurrency market. While the exact impact of this alleged sale remains uncertain, fear-induced selling and thin summer liquidity contributed to a significant drop in bitcoin’s value. Despite this setback, bitcoin is still up by approximately 57% for the year, and its future trajectory remains uncertain as investors monitor market dynamics.
