Senior economist at NinjaTrader Live Tracy Shuchart analyzed the factors behind BTC’s drop from $126,000. She calls the situation a system failure: the macro narrative collapsed, ETFs turned into an exit channel for institutions, and record leverage triggered cascading liquidations. Shuchart believes the market has yet to find a stable level that can attract genuine buyers.
Broken Macro Narrative
Shuchart writes that BTC’s rally from $40,000 to $126,000 was built on two pillars: expectations of Federal Reserve easing and inflows through spot ETFs. This created a fragile system. Futures open interest reached $94 B, and some platforms were offering leverage of up to 1001:1.
The decline began after the regulator’s stance shifted. The probability of a December rate cut fell from 90% to 40%, and real yields on short-term Treasuries stayed above 5%. The macro story that once supported the $126,000 price level disappeared within weeks.
Institutions Exit, Long-Term Holders Take Profit
Shuchart noted that ETF infrastructure, initially seen as a channel for inflows, became a tool for institutions to exit. Within days, $1.1 B flowed out of Bitcoin ETFs, which she views as professional risk reduction.
Long-term holders who accumulated BTC between $40,000 and $80,000 joined the sell-off. Over 30 days, they distributed 815,000 BTC, locking in gains of 50–150% and positioning for further volatility. She believes they are ready to return, but only at lower levels.
Chain Reaction of Liquidations
Once BTC broke below the key $100,000 level, a wave of liquidations followed. In October and November, the derivatives market lost more than $20 B in margin positions. On some days, liquidations exceeded $3.2 B, each wave triggered by the previous one. Open interest fell from $94 B to $68 B by the time of her analysis.
Shuchart described this as a redistribution of paper gains after a 215% rally. She sees a 25% correction under such leverage as a natural reaction for a market that lost its macro foundation and believes it does not alter the long-term thesis.
According to her, the market needs natural demand before the structure can stabilize. She outlines three necessary stages: complete leverage cleansing, long-term holders shifting from distributing to accumulating, and buyers willing to accept volatility.
Read also:
- Hayes Warns of Shrinking Dollar Liquidity and New Pressure on Bitcoin
- Bitcoin Approaches “Death Cross” Pattern After 25% Decline
- Haseeb Qureshi from Dragonfly: This Downturn Is The Easiest Bear Market
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