More than 10,000 BTC flowed into spot exchanges, investors panic-sold, Bitcoin is in danger of reaching $40,000

Financial markets fell sharply on Thursday as investors worried about tensions in Ukraine and Russia. Traders generally sold riskier assets such as stocks and turned to traditional safe-haven assets such as bonds and gold. The Dow Jones Industrial Average fell 1.8%, the largest single-day drop in 2022, the S&P 500 fell 2.1%, and the Nasdaq Composite fell 2.9%. The crypto market was not immune, and on-chain data showed that more than 10,000 bitcoins flowed into spot exchanges in the past 24 hours, which may suggest that traders tend to sell tokens rather than hold them. As of the close of U.S. stocks on Thursday, Bitcoin plummeted to below $41,000, a daily drop of 7.29%, the largest single-day drop since January 21. Other popular cryptocurrencies, including Ethereum (ETH) and Solana (SOL), fell by nearly 8%.

The 10-year Treasury yield fell more than 8 basis points to 1.96% (yields move inversely to prices). Meanwhile, gold futures jumped to their highest level since June. "In the short term, negative sentiment and additional negative factors are definitely having a big impact on the market," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

In the crypto market, some traders expect higher volatility. According to data compiled by CryptoQuant, more than 10,000 bitcoins flowed into spot exchanges in the past 24 hours, which may indicate that traders prefer to sell tokens rather than hold them in their wallets.

Meanwhile, Bitcoin options traders remain uncertain about future price direction, with options contract data showing a 50% chance that Bitcoin will trade above $40,000 in September. Neutral sentiment coupled with a steady decline in volume and volatility suggests many buyers remain on the sidelines.

Bitcoin’s short-term implied volatility is starting to rise from its lows, meaning traders are expecting greater price volatility in the coming weeks. “Implied volatility could go back up again, especially in Bitcoin, back up to 90%,” Don Kaufman, co-founder of TheoTrade, told CoinDesk. “I don’t want to go long until I see Bitcoin go below $30,000.” However, Kaufman said that if tensions between Russia and Ukraine continue, cryptocurrencies will experience short-term volatility, but could eventually attract more inflows.

Independent market analyst Michaël van de Poppe also took a cautious view, highlighting in the chart below the area he believes BTC needs to break through.

The red box in the chart indicates that Bitcoin needs to clearly break through $50,000 to return to the hands of the bulls. He said: "Nothing has really changed, this area is still the Bitcoin [price] I am looking for, I want to see a break through this weekly area ($50,000), if this does not happen, then I am not optimistic."

The total crypto market cap currently stands at $2.08 trillion, with Bitcoin’s dominance at 41.8%. The ongoing downward consolidation has resulted in Bitcoin’s losses so far in 2022 reaching approximately 13%.