Bitcoin has experienced a significant downturn, declining nearly 4% from its peak on Thursday and dropping below the $99,000 mark after reaching an intraday high of $103,690, as reported by CoinGecko. This decrease reflects a broader risk-off sentiment permeating traditional markets, particularly as equities also saw declines; the Nasdaq index fell by about 2%.
Ryan McMillin, chief investment officer at Merkle Tree Capital, noted that the selling pressure in the cryptocurrency market is largely attributed to traders reassessing the risks following the recent reopening of the U.S. government after an extended shutdown. Although the funding bill has provided a temporary respite, McMillin pointed out that lingering concerns remain. These include weeks of halted economic data, a federal statistical system described as “permanently damaged,” and the White House’s announcement that the upcoming jobs report will be released without the unemployment rate, raising further alarm among investors.
Adding to the downward pressure on Bitcoin is a marked increase in selling activity among long-term holders. According to a Glassnode report, these holders offloaded approximately 815,000 BTC over the past month, pushing the selling pressure to its highest levels since January 2024. The report indicated that the 30-day change in supply held by long-term holders is decreasing sharply, indicating a rapid distribution of Bitcoin among these investors. Analysts at CryptoQuant noted that the selling frenzy commenced as prices climbed to new highs, coinciding with a contraction in demand.
The weakening demand is also highlighted by net outflows in Bitcoin exchange-traded funds (ETFs), a negative premium on Coinbase, and a general contraction in market enthusiasm. Charlie Shery, head of finance at the Australian crypto exchange BTC Markets, explained that while sell-offs by whales typically carry little significance, the absence of strong bid support from buyers exacerbates the situation. During earlier phases of the market, steady demand from entities like ETFs and MicroStrategy provided stability; however, in their absence, recent sell-heavy flows have contributed to Bitcoin’s ongoing decline.
Meanwhile, market participants on the prediction platform Myriad, owned by Dastan, have reduced the likelihood of Bitcoin reaching $115,000 before dropping to $85,000, now estimating a 56% chance, down from 68% just a day prior. McMillin remarked that the ongoing range trading since early August is at risk of dissolving if Bitcoin fails to maintain the crucial $98,000 support level, potentially leading it to dip into the $90,000 range, reminiscent of the market’s behavior in June.
As uncertainty looms over the market, investors are seeking clarity to regain confidence, though the source of that certainty remains elusive.
