Bitcoin slipped below $61,000 on Wednesday, continuing its recent downtrend amid rising concerns about a potential flood of seized cryptocurrency hitting the market. The slide came as reports emerged that coins linked to the infamous PlusToken Ponzi scheme were being moved to exchanges, heightening fears of selling pressure. This weakness in the crypto market contrasted sharply with U.S. equities, which closed at record highs.
Bitcoin started the day trading around $62,000 but gradually fell during the U.S. trading session, dropping to a low of $60,400, a 2.4% decline over the past 24 hours. Ether (ETH) fared slightly better for much of the day but eventually dropped 3.2% as selling pressure intensified across the broader cryptocurrency market.
The downward move in both major cryptocurrencies followed reports that Chinese authorities had begun moving a portion of the crypto assets seized from the PlusToken Ponzi scheme to exchanges. In 2020, Chinese officials confiscated nearly $4 billion worth of crypto, including BTC, ETH, DOGE, and XRP, from PlusToken operators. On Wednesday, market watchers noted that approximately 7,000 ETH—worth around $16 million—had been transferred to exchanges in the past 24 hours, sparking speculation that these assets could soon be liquidated, adding selling pressure to the market.
While the crypto market digested this development, traditional markets posted gains, with the S&P 500 reaching a new all-time high and the Nasdaq climbing 0.6%. Investors also weighed the latest Federal Open Market Committee (FOMC) meeting minutes, which showed that a “substantial majority” of Federal Reserve officials supported a larger rate cut in September, though there was some division over whether to cut by 50 or 25 basis points. The document reinforced expectations of further rate cuts but revealed uncertainty about the timing and scale of future reductions.
In related news, U.S. federal prosecutors brought charges against several crypto trading firms, including Gotbit, ZM Quant, CLS Global, and MyTrade, for market manipulation and fraud. The investigation revealed how trading bots were used to inflate exchange volumes for lesser-known tokens. The crackdown added to the negative sentiment surrounding the crypto market.
Meanwhile, speculation ran wild after prosecutors created a fake cryptocurrency called NexFundAI Token as part of their investigation. Following the revelation, a token with the ticker NEX briefly surged 3,500%, only to crash when it was revealed that the token had already been disabled by law enforcement.
The latest market movements reflect the ongoing volatility in the crypto space, with Bitcoin’s price movements increasingly influenced by macroeconomic data, regulatory actions, and significant events like the handling of seized assets. As traders brace for more potential volatility, especially with 21% of traders now expecting the Fed to hold rates steady in November, the future trajectory of crypto markets remains uncertain.
