Bitcoin rebounds after weekend sell-off driven by 'whale' liquidation moves

New Straits Times

5 days ago

S. Birruntha
KUALA LUMPUR: The sharp weekend sell-off in cryptocurrencies may have been intensified by strategic selling from large holders, or "whales", aiming to trigger liquidations in the derivatives market.
Tokenize Xchange founder and group chief executive officer Hong Qi Yu said the sudden dip, which followed reports of a United States strike on Iranian nuclear sites, created an opportunity for such players to exploit market panic.
"Whales may have taken advantage of the panic to trigger a liquidation cascade," he told Business Times.
Bitcoin and major altcoins fell sharply over the weekend amid rising geopolitical tensions, erasing recent gains and sending the broader crypto market into the red.
However, the correction proved short-lived. The market rebounded late Sunday, with Bitcoin recouping much of its losses as fears of a broader conflict subsided.
Hong remains optimistic about the market's near-term outlook, viewing the pullback as temporary and not the start of a prolonged downtrend.
"I remain bullish on the overall crypto market, with Bitcoin leading the way. The US$100,000 level appears to be well supported, and I expect to see a recovery within the next week, with the possibility of Bitcoin reaching a new all-time high soon," he said.
Hong emphasised that the view is his personal opinion and not financial advice.
He added sharp price swings are not unusual during periods of geopolitical tension, citing Bitcoin's performance during the start of the Ukraine-Russia conflict.
"For instance, when the Ukraine-Russia war broke out, Bitcoin fell from around the US$45,000 level to the US$30,000 range before staging a relief rally," he said.
Industry players believe the weekend volatility is unlikely to derail the broader bullish trend, which remains supported by long-term adoption and institutional interest in digital assets.
SPI Asset Management managing director Stephen Innes said the sell-off reflects classic flight-to-safety behaviour, where "when bombs drop, liquidity gets pulled."
"Crypto, still seen as risk-on, got hit alongside equities," he said.
"Historically, crypto hasn't been a reliable wartime hedge — it trades more like high-beta tech than digital gold during shock events.
"With volatility elevated and macro uncertainty high, more downside's possible if the conflict escalates — but expect dip buyers to circle fast if tensions cool."
Another industry observer said the crypto market tends to react sharply to conflict-related headlines, often mirroring the broader market's risk-off behaviour.
However, he noted that in previous geopolitical crises, Bitcoin and other digital assets have also shown resilience, often recovering faster than traditional equities.
"This is partly due to crypto's decentralised nature and its growing perception as a hedge against fiat currency instability over the medium term," he said.
"But still, macro factors such as inflation trends, interest rate expectations, and institutional inflows remain more influential in shaping the crypto recovery narrative.
"If geopolitical tensions stabilise or the market begins to price in their impact, we could see crypto regain momentum, especially if Bitcoin holds above key psychological levels," he added.
Market analysts said while crypto markets often suffer steep declines during times of war or geopolitical escalation, their reactions are not always linear.
Assets like Bitcoin and Ethereum typically fall in the immediate aftermath of such developments, reflecting a broader wave of investor risk aversion.
Both tokens recorded notable losses following the recent reports of US military action targeting Iranian nuclear sites.
This behaviour reflects crypto's continuing status as a high-risk asset class, similar to equities, which investors tend to offload during periods of heightened uncertainty.
During such times, capital often rotates into traditional safe havens such as US Treasuries, gold and the US dollar, assets perceived to offer stability in volatile environments.
As a result, cryptocurrencies don't always serve as a reliable hedge in the short term. However, if the situation stabilises or the market adjusts, crypto assets have often shown an ability to rebound.
One recent example was the partial recovery seen in Bitcoin following heightened tensions between Israel and Iran earlier this year.