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Whale wallet outflows suggest $56,000 is Bitcoin's bottom

Whale wallet outflows suggest $56,000 is Bitcoin's bottom

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Amid a tumultuous crypto market, Bitfinex’s latest report offers a glimmer of hope, suggesting that $56,000 could be Bitcoin’s bottom in the current cycle. The report analyzes data from whale wallet outflows, spent output profit ratio (SOPR) values, and the average cost basis for Bitcoin spot ETF inflows to support this claim.

As the debate over the classification of cryptocurrencies as securities continues, federal prosecutors are increasingly relying on wire fraud charges to target crypto crime. The rise in wire fraud cases coincides with the “crypto winter” of late 2022 and the collapse of FTX, with prosecutors using these laws to fill in loopholes where no existing statutes or regulations apply.

While it faces charges from the DOJ, KuCoin has announced a $10 million airdrop in Bitcoin and its native token for users experiencing withdrawal delays. The exchange has faced numerous withdrawals and a significant drop in total assets since the charges surfaced, while also dealing with legal challenges from the Commodity Futures Trading Commission (CFTC) for offering unregistered trading services and non-compliance with KYC regulations.

Today’s Newsletter

  • Whale wallet outflows suggest $56,000 is Bitcoin’s bottom: Bitfinex report
  • SBF faces decades in jail as prosecutors plug crypto loophole
  • KuCoin announces $10 million airdrop in Bitcoin and its native token amid legal woes

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BITCOIN

Whale wallet outflows suggest $56,000 is Bitcoin’s bottom: Bitfinex report

Bitfinex’s latest report suggests that $56,000 could be the bottom for Bitcoin in the current market cycle, based on data from whale wallet outflows, spent output profit ratio (SOPR) values, and long-term holder realized prices. The report explains that whale wallet outflows typically signal the onset of a healthy Bitcoin price correction, while SOPR values significantly above 1 suggest aggressive profit-taking. Long-term holders have hardly purchased Bitcoin since February, with their realized price below $20,000, indicating that Bitcoin is unlikely to fall to that level in this cycle.

The report also addresses the recent spot ETF outflows, particularly from the Grayscale Bitcoin ETF, which exceeded $2 billion last week. However, when considering inflows into other ETFs, the net outflow tallies to $896 million, and the report argues that these outflows do not necessarily raise red flags for the market’s future. Factors such as investors transitioning to more competitive ETF providers and the disappearance of the GBTC discount after its transformation into an ETF have contributed to the outflows, reflecting a maturation within the investor base rather than a lack of confidence in the market. [cryptobriefing]

REGULATION

SBF faces decades in jail as prosecutors plug crypto loophole

Federal prosecutors are increasingly relying on wire fraud charges to target crypto crime, as the debate over whether cryptocurrencies are securities continues in court. Wire fraud, which applies when any form of electronic communication is used, has become the weapon of choice for prosecutors, with cases filed against high-profile figures such as Sam Bankman-Fried, the co-founder of FTX, and Elizabeth Holmes, the founder of Theranos Inc. The rise in wire fraud cases coincides with the “crypto winter” of late 2022, which saw Bitcoin plunge to a two-year low and the collapse of several crypto companies, including FTX.

Prosecutors are using wire fraud laws to fill in loopholes where there are no existing statutes or regulations, as regulators continue to fight over where crypto fits in the legal landscape. The wire fraud statute provides prosecutors with advantages that other laws don’t, simply because of its breadth, and has been used in cases involving misconduct with digital assets, such as those against former employees of OpenSea and Coinbase Global Inc. The rise in wire fraud charges also comes as overall white-collar crime cases have dropped, despite a slight uptick in the last fiscal year. [bloomberg crypto]

REGULATION

KuCoin announces $10 million airdrop in Bitcoin and its native token amid legal woes

Despite its legal troubles, KuCoin has announced a $10 million airdrop in Bitcoin and its native token for users experiencing withdrawal delays. This offering comes after recent charges from the US Department of Justice (DOJ) were filed against the exchange. The airdrop details will be revealed within the next three days, and the exchange also plans to reward users who stayed with the platform during this challenging period. The announcement comes after KuCoin’s users withdrew $1 billion (excluding Bitcoin) from the exchange over the past 24 hours, causing the total assets on the exchange to drop by 20% to $4.8 billion.

The DOJ has accused KuCoin and its founders of operating an unlicensed money transmission business and facilitating $9 billion in illegal transactions since 2017. The exchange has acknowledged the allegations and is actively seeking legal counsel to address the matter while assuring users that their assets remain secure. Additionally, KuCoin faces legal challenges from the Commodity Futures Trading Commission (CFTC) for offering unregistered trading services and non-compliance with KYC regulations. Despite the recent issues, KuCoin claims to be processing remittances normally, although delays may occur due to the increased number of user requests. [cryptobriefing]

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