A significant shift in Bitcoin ownership has occurred during the recent market downturn, coinciding with ongoing uncertainty in the broader cryptocurrency market regarding a potential US Federal Reserve interest rate cut in December.
Over the past seven days, more than 8% of the total Bitcoin (BTC) supply has changed hands. Analysts describe this as one of the most substantial on-chain events in Bitcoin's history. This level of supply movement was previously observed during market declines when Bitcoin was trading around $5,000 in March 2020 and approximately $3,500 in December 2018. Both of those periods preceded accumulation phases that ultimately led to new all-time highs for the cryptocurrency.
However, it is important to note that up to half of the current Bitcoin supply movement may be attributable to a Coinbase Wallet migration that was announced on Saturday.
Markets on a "Knife's Edge" Ahead of Federal Reserve Decision
Bitcoin's price and overall investor sentiment are currently described as being on a "knife's edge." This precarious position is largely due to mixed signals concerning the Federal Reserve's interest rate decisions for December.
According to Nic Puckrin, a digital asset analyst and co-founder of The Coin Bureau, the Federal Reserve holds significant influence over the market's performance towards the end of the year. The upcoming rate decision will be a key determinant of whether the market experiences a "Santa rally" or a "Santa dump."
"As we get closer to Dec. 10, I expect market jitters to continue, and the Fed’s press conference will certainly have traders on the edge of their seats."
Expectations for an interest rate cut at the Federal Reserve's December 10 meeting have seen a notable shift over the past week.
The CME Group's FedWatch tool indicates that markets are now pricing in an 82% chance of a 25 basis point interest rate cut, a significant increase from the 50% probability seen just a week prior. This growing expectation of an interest rate cut has been a primary driver behind Bitcoin's recent recovery from $81,000 to $87,000.