Bitcoin Price Plummets as Short-Term Traders Flee Market at Loss
Bitcoin Price – On Monday, Bitcoin (BTC) saw a significant sell-off, particularly from short-term holders who exited the market at a loss as prices plummeted. According to Glassnode data, addresses holding Bitcoin for less than 155 days, known as short-term holders, transferred over 21,000 BTC (approximately $2.2 billion) to exchanges. This move came as Bitcoin dropped as much as 4.7%, marking its largest decline in two weeks, based on CoinDesk Indexes pricing.
These short-term holders, typically active traders, new entrants, and those with weaker hands, are more sensitive to price fluctuations. The sharp decline below $98,000 followed a dip earlier this month, when Bitcoin’s price had surged close to record highs of around $108,000. The drop back into the five-figure range spooked many of these holders, prompting them to sell.
Capitulation Signs Emerge Across the Market
The sell-off was not limited to short-term holders. Derivative traders also showed signs of capitulation, as seen with the Chicago Mercantile Exchange (CME), where open futures positions significantly dropped. The perpetual funding rates for Bitcoin turned negative, indicating strong bearish sentiment and increased demand for short positions. This is often a sign of market bottoms, as seen in past instances such as January 13, when Bitcoin briefly fell below $90,000.
In addition, Bitcoin exchange-traded funds (ETFs) listed in the U.S. experienced a massive outflow of $457.6 million, further signaling investor uncertainty. Similar outflows were observed in mid-January, reflecting a broader trend of de-risking in the market.
Institutional Activity and Market Sentiment
The sell-off was also reflected in institutional markets, where open interest in Bitcoin futures at the CME dropped by a record $2.4 billion. This, coupled with the decline in Nvidia (NVDA) shares, underscores the cautious sentiment pervading the market. While Bitcoin remains a strong player in the crypto space, its recent performance indicates increasing market volatility and uncertainty.
As Bitcoin continues to navigate these turbulent waters, investors are advised to stay vigilant as market conditions evolve.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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