The crypto market has shown signs of weakness in recent hours, with a notable drop in Bitcoin below $61,000 and a 2% slump in Ethereum. These market movements sharply contrast with the performance of US stocks, which reached new highs in parallel.
A selling pressure linked to PlusToken?
The recent drop in the price of Bitcoin can partly be explained by significant crypto movements related to the Chinese Ponzi scheme, PlusToken. Reports have revealed that 7,000 ETH (approximately $16 million) from assets seized by Chinese authorities in 2020 were transferred to exchange platforms. This massive transfer has reignited concerns of selling these assets, creating potential selling pressure on the market. In fact, 540,000 ETH ($1.3 billion) is still in the hands of authorities.
As a reminder, in November 2020, Chinese authorities seized nearly $4 billion worth of cryptocurrencies, including BTC, ETH, DOGE, and XRP, related to the PlusToken Ponzi scheme. The liquidation of these held funds could have a significant impact on prices if large volumes were to be sold in the market. Investors are thus particularly attentive to any further movement of these funds.
Traditional markets rise despite interest rate uncertainties
In contrast to the crypto market, US stocks had a positive day. The S&P 500 closed at a new all-time high, while the tech-focused Nasdaq rose by 0.6%. The yields on 10-year US Treasury bonds reached 4.08%, their highest level in two months, as investors digested the minutes from the last Federal Reserve meeting.
The document reveals that the majority of Fed members support a larger rate reduction, although some lean towards a more cautious approach with a 0.25% cut. This has led traders to reassess the chances of further rate cuts in November, with a 21% probability that the Fed will keep rates unchanged at the next meeting, compared to 0% last week. The hope for a 0.50% reduction has completely disappeared.
