According to CryptoQuant, the decline triggered a chain reaction in the derivatives market, leading to about $640 M in long positions being liquidated in just 24 hours. It was the second-largest single-day liquidation since June 2021.
The sharp fall resulted from a structural breakdown that forced traders with high leverage to close positions en masse. After reaching $98,000, buyers quickly stepped in, pushing the price back up to $101,000. This level is now seen as critical for bulls, as it aligns with the lower boundary of the ascending channel that has shaped the market structure since October 2023.
Changing Market Drivers
Unlike the October crash, which was caused by a cascade of liquidations, the latest decline is driven mainly by spot market selling. According to Bloomberg, Bitcoin fell 7.4%, dipping below $100,000 for the first time since June and losing more than 20% from its peak a month earlier. Some losses were later recovered, but the market remains unstable.
Data from CoinGlass shows that about $1.7 B in positions were liquidated within 24 hours – far below the $19 B wiped out during the October crash. Open interest in futures remains subdued, while the options market increasingly reflects expectations of further downside, with traders targeting levels near $80,000.
Long-Term Holders Are Exiting Positions
Analysts say the recent downturn is increasingly tied to selling by long-term investors.
“Over the past month, more than 319,000 bitcoins have been activated, mostly coins held for six to twelve months. This indicates significant profit-taking since mid-July,” said Vetle Lunde, Head of Research at K33.
He added that some of the movements may involve internal transfers, but a large portion clearly represents actual selling activity.
Markus Thielen, Head of Research at 10x Research, reported that so-called “mega whales” have sold about 400,000 BTC worth roughly $45 B over the past month. The resulting imbalance between sellers and new buyers is now shaping the market’s direction.
According to Thielen, the sell-off could extend into spring – similar to 2021-2022, when major investors sold over one million bitcoins in a year. He does not expect a full-scale collapse but sees room for further downside.
“The market will likely consolidate and may drop further – my lower target is $85,000,” he said.
Outlook
The Block reported that Julio Moreno, Head of Research at CryptoQuant, believes Bitcoin’s loss of its 365-day moving average could signal the start of a deeper correction if the price fails to reclaim it soon.
Despite the volatility, investor interest in BTC remains high, especially after the approval of spot Bitcoin ETFs, which have shifted the market’s focus from valuation metrics to real trading volumes.
At the time of publication, Bitcoin was trading around $102,000.
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