Crypto Week: BTC Failed to Become a Digital Gold

Bitcoin (BTC) is down 2.3% to $57,070 this week, recovering most of the early 16.0% losses after plunging to $49,035. The sell-off was triggered by a weak U.S. labor market report for July, which heightened recession fears. The S&P 500 broad market index fell by 6.0%, while the tech-heavy Nasdaq 100 index tumbled by 8.0% over just two trading days.

Bitcoin's failure to act as a digital gold, a role often touted by crypto enthusiasts, was evident. It lost 24.0% in just two days, significantly underperforming the Nasdaq 100 and declining much more than gold. This sharp drop calls into question Bitcoin's reputation as a safe haven.

However, large Bitcoin holders, or whales, seemed unperturbed. According to IntoTheBlock, wallets holding 1,000-10,000 BTC did not partake in the recent sell-off, unlike smaller holders with less than 1 BTC. Similarly, major Bitcoin ETFs like IBIT from BlackRock, FBTC from Fidelity, and GBTC from Grayscale saw net inflows of $541.5 million last week, despite a $107.2 million net outflow in the first couple of days this week. This suggests that panic among smaller investors might have driven the sell-off.

Whales and other large investors appear to have a long-term positive outlook on Bitcoin. Significant call options worth $1.0 billion, set to expire in September, December, and March 2025, indicate bets on Bitcoin reaching $90,000-$100,000. These investors are buying the dip, anticipating that Bitcoin's price will rise to these levels unless a major market panic occurs, which currently shows no signs.

Technically, Bitcoin has strong support at $50,000-$52,000. While prices may retest this level in August, September and October are expected to be highly positive for the cryptocurrency. Those planning to join the post-halving Bitcoin rally should consider making their trading decisions now.