Emily Walker
The cryptocurrency market experienced a notable decline today, with Bitcoin prices dropping below $93,000. After reaching a record high of $99,588 on Binance last Friday, the cryptocurrency has seen a decrease of over 6%, hitting $92,326. In just the last 24 hours, Bitcoin has fallen by 3.6%. Experts attribute this downturn to three primary factors:
#1 Significant Profit-Taking by Bitcoin Holders
As Bitcoin approached the crucial $100,000 mark, many long-term investors decided to realize their profits, resulting in increased selling pressure. James “Checkmate” Check, a former chief on-chain analyst at Glassnode, highlighted that long-term holders have sold off $60 billion worth of Bitcoin in the past month.
“In the last 30 days, long-term holders have liquidated $60B of Bitcoin supply. Notably, 21% of this occurred in November, indicating the largest profit-taking we’ve observed this cycle,” Check noted via X.
He added that the selling pressure appears to be from newer investors who bought in at the previous peak of $68,000, with 198,000 BTC sold in November alone. This indicates that those who endured the last significant drop are now cashing in on the recent price spikes.
#2 Extensive Liquidation in Long Positions
The futures market has experienced major liquidations, exacerbating the crash in Bitcoin prices. According to Coinglass, approximately $577.39 million in total liquidations occurred in the past day, with long positions representing about $468.98 million.
QCP Capital, based in Singapore, remarked on the situation: “Bitcoin has dropped under $93k since our last update, with more than $430 million in long liquidations.” They noted that this decline coincided with a halt in net inflows to spot ETFs after a successful five-day streak, causing a reported outflow of $438 million on Monday, coupled with a 4.4% drop in MicroStrategy’s stock.
They also pointed out that “the downturn follows MicroStrategy’s record $5.4 billion BTC acquisition last week.” With upcoming US holidays and no immediate catalysts for an upward price movement, they suggested that Bitcoin’s ascent to the influential $100,000 milestone has come to a standstill.
Additionally, they observed a change in market sentiment: “ETH implied volatility has significantly shifted toward put options over calls, reflecting similar trends in BTC as the market takes a break. Increasing concerns about potential downsides could heighten, especially with the FOMC minutes and PCE data soon to be released.”
Despite the drop, they offered a cautious outlook: “For perspective, this downturn is not excessive. Bitcoin is merely retracing to levels seen early last week. The market had become extremely overextended following the elections, resulting in an expected pause.”
#3 Decline of the Coinbase Premium
The Coinbase premium gap, which serves as a vital indicator of institutional interest in the US, has disappeared. During Bitcoin’s march toward $100,000, there was a significant premium on Coinbase that peaked at +$224 on November 22, driven by heavy inflows into US Bitcoin ETFs and considerable purchases by MicroStrategy, which bought 55,500 BTC for $5.4 billion last weekend.
However, this dynamic shifted drastically yesterday. On-chain analyst Maartunn (@JA_Maartun) commented that “MicroStrategy had been a major support for the market. With the Coinbase premium gap disappearing, the market began to drop.”
Charles Edwards, CEO of Capriole Investment, noted the substantial sell wall at the $100,000 level, saying that despite MicroStrategy’s massive buy, they “only impacted the major ask wall by about 25%.” This illustrates the formidable selling interest at the $100,000 threshold.
The declining premium on Coinbase also mirrors a decrease in buying pressure from US markets, highlighted by outflows from spot Bitcoin ETFs. Yesterday, the total outflows from spot ETFs reached $435.3 million.
While BlackRock observed inflows of $267.8 million, several prominent ETFs experienced notable outflows: Bitwise lost $280.7 million, Grayscale BTC Trust (GBTC) faced $158.2 million in outflows, Fidelity saw $134.7 million in redemptions, and ARK Invest dropped by $110.9 million.
As of the latest updates, BTC is trading at $92,422.
