Bitcoin has been falling again — but unlike in last month’s selloff, it’s not leverage breaking the market.
The original cryptocurrency fell as much as 7.4% on Tuesday to dip below the $100,000 mark for the first time since June. That’s down more than 20% from a record high reached a month ago. Bitcoin recovered slightly on Wednesday morning but is still struggling for a sure footing.
If October’s crash was about forced selling, the current drawdown may reflect something more sobering: conviction eroding. Long-time Bitcoin holders have offloaded around 400,000 Bitcoin over the past month, an exodus of about $45 billion that’s left the market unbalanced, according to Markus Thielen, head of 10x Research.
“Over 319,000 Bitcoin has been reactivated in the past month, mainly from coins held for six to twelve months — suggesting significant profit-taking since mid-July,” said Vetle Lunde, head of research at K33. “While some reactivation stems from internal transfers, much reflects real selling.”
Unlike the cascading wipeouts that triggered the October swoon, the current slide has been led by a steady drumbeat of selling in the spot market. That marks a shift from the pattern crypto traders have come to expect lately, where sudden bursts of volatility are typically driven by liquidations in futures markets.
Roughly $2 billion in crypto positions were liquidated over the past 24 hours, according to CoinGlass — modest compared to the $19 billion in forced unwindings that punctuated last month’s crash. Open interest in Bitcoin futures remains subdued, and options traders have been placing downside bets through put contracts targeting the $80,000 level.
With leverage relatively muted, attention has turned to the long-time holders who are choosing to sell.
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