Assessing Bitcoin’s [BTC] losses as it fails to recover from the fake news-induced FUD
- The divergence between daily miner revenue and 365-day SMA has broadened since the start of 2023.
- The data on U.S. government’s BTC holdings didn’t show any decline since the beginning of May.
Bitcoin [BTC] recorded losses for the second day in a row, plunging to its lowest level in nearly two months. At the time of writing, the coin exchanged hands at $26,332.73, a sharp descent from the $28,000 level attained barely two days ago.
Read Bitcoin’s [BTC] Price Prediction 2023-24
As BTC sneezed, the broader crypto market caught cold. Major assets were trading in red and the global crypto market cap reduced by nearly 3% from the previous day, data from CoinMarketCap revealed.
Much of the sell-off was driven by FUD triggered due to the news of U.S. government divesting its BTC holdings. However, as it turns out, the rumors were found to be false.
The age of misinformation
Blockchain analytics firm CryptoQuant described the attempt to propagate fake news of U.S. government selling its Bitcoin as “coordinated”, with many popular accounts retweeting the news without any fact-checking.
As the rumor travelled far and wide, it resulted in the second-largest long liquidation for BTC in 2023, with positions worth $36 million getting liquidated within an hour on 10 May.
Coordinated FAKE NEWS about US government selling Bitcoins leads to second-largest long liquidations in 2023
"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… pic.twitter.com/mfyglR8M8m
— CryptoQuant.com (@cryptoquant_com) May 11, 2023
Moreover, the data on U.S. government’s BTC holdings didn’t show any decline since the beginning of May. This confirmed the falsity of the rumor.
The metric, developed by Glassnode, corresponds to the amount of BTC held in addresses controlled by authorities. The data was obtained from publicly available information.
More bearishness for BTC?
BTC’s Open Interest (OI), or the dollar value of active trading positions on the futures market, increased by 1.36% in the last 24 hours, as per Coinglass data.
This formed a divergence with falling prices. It indicated that new short positions were being opened.
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The Longs/Shorts Ratio for BTC further validated the idea. Over the past 24 hours, the ratio dipped sharply below 1. This implied that more traders were gunning for price losses as compared to those positioning for price gains.
Additionally, the latest event reignited the debate around Bitcoin’s risk factor. The decoupling from equity markets showed that the largest tradable digital asset moves more on speculation and hearsay than on macroeconomic drivers.