Bitcoin is a cryptocurrency that has gained the most popularity in the past few years. In November 2021, Bitcoin hit an all-time high of $68,000, growing the entire crypto industry to a market capitalization of more than $2 trillion. Anyone who has been in DeFi long enough knows just how volatile cryptocurrency is. So, when Bitcoin decreased its value by a third in the last six months, many began to lose faith in the industry.
On September 5th 2022, one of the most significant transfers happened. 5000.01 BTC was transferred at 04:50:38 (UCT +8) by the whale address at (18xGHNrU26w6HSCEL8DD5o1whfiDaYgp6i). Its worth is estimated at around $100m. The wallet which made the transfer had a long-standing relationship with Bitcoin since 2013.
Who is Kraken Exchange?
Founded in 2011 in San Francisco, it is a crypto exchange company that supports individuals and institutional investors with cryptocurrency trading. It is known as one of the world’s largest and most reputable Bitcoin exchanges.
Kraken Exchange remains an industry leader for trading owing to its top security, low trading fees and a large selection of available cryptocurrencies, making it attractive to new and experienced traders.
What’s The Significance of 5000 BTC Being Moved to Kraken Exchange?
When a whale account moves many digital tokens and intends to sell a significant portion of them, it creates a plunge in the price of top market assets. What exactly does this mean? Simply put, it means that the market is volatile, which will result in a general price reduction in the real-time prices of BTC. In addition, it causes a chain reaction, where investors panic and start withdrawing investments at a reduced price. This creates further volatility in the cryptocurrency market.
Kabir Seth, the founder of Speedbox, commented on this transaction and said, “Most whales have seen multiple market cycles of Bitcoin to have the patience to wait for the next one. In the Bitcoin ecosystem now, the faith of whales is reinforced by the macroeconomics of inflation and, more recently, the correlation with the stock markets.”
What Does That Mean for The Future of Cryptocurrency?
According to the founders of Bitcoin Method, “Bitcoin will undoubtedly have a price that further fluctuates, as it is run on the influence of the supply and demand market and other factors such as investor and user sentiments, government regulations and word-of-mouth as done by the media (which can inspire fear)”. This will flow over into other cryptocurrencies, which will create a temporary dip in the market.
Bitcoin was further under pressure since August 2022’s US unemployment report released that unemployment in the US grew by 3.7% since July 2022, while BTC gained 2% in the last week of August. This is indicative of inflation and raising interest rates.
Gavekal Research submitted a report on September 4th 2022, stating, “The Fed is also busy ‘burning’ money (aka quantitative tightening) to restore the credibility of the US dollar. That creates a big breeze for all cryptocurrencies.“
Improvements to the cryptocurrency industry are constant, as we see Michal Saylor introducing a MicroStrategy to form a solution to the Bitcoin network, allowing transactions to be faster and cheaper. So, while this transfer might temporarily disrupt the cryptocurrency industry, it is impossible to say it will be forever.
The last six months have seen a rollercoaster of high ROIs and losses for the cryptocurrency industry. BTC had its value halved in April and June, with other coins following behind. Crypto is still a relatively young industry, with many projects being less than five years old. Any investment is accompanied by risk as it is highly speculative and a volatile industry to invest in.