After a brief bounce in price from $86,000 to $90,000 earlier in the week, Bitcoin appears to be experiencing routine movement within a consolidation range. However, the market is on edge with curiosity about what is happening to the flagship cryptocurrency, especially after its price plummeted to $81,000. Several new on-chain perspectives have emerged that explore the fundamental dynamics of the BTC market.
On-Chain Signals Behind Bitcoin’s Bearish Movement
In a recent post on social media platform The analysis started with consumption results by LTH/STH indicator.
This indicator shows that long-term Bitcoin holders have been distributing their BTC shares heavily over the past 30 days. Data from Glassnode shows that over the past 30 days, an average of more than 12,000 BTC has been distributed per day. This is equivalent to 370,000 BTC per month. As expected, distributing large amounts of BTC will put significant selling pressure on the price.
However, distribution among LTHs was not the only event that occurred. US spot Bitcoin ETFs also added to the bearish setup, recording multiple net outflows over the past few weeks. This means there was less institutional demand to ease LTH sales.
Source: @glassnode on X
If a demand gap emerges amidst the LTH sell-off, we can expect the BTC price to fall freely, especially if bearish momentum enters the market. So this may have influenced the recent turn to the downside.
Long-term holders weren’t the only ones selling. The net transfer volume indicator to/from miners shows that Bitcoin’s miner behavior reinforces weaknesses in the market structure. Glassnode reports that miners are continuing to send BTC to exchanges, adding to structural bearish pressure. This is because positive exchange inflows are often a sign of growing interest in offloading assets.
Derivatives market dynamics also played a role in deepening the BTC price decline. As the flagship cryptocurrency lost its former ground, there was a wave of prolonged liquidations that followed. Glassnode highlighted that the move liquidated more than $300 million. When long positions are forced to liquidate, as they have in this cycle, downward momentum is typically amplified and the price falls further.
With speculation in the options market more defensive than bullish and spot demand subdued, it is safe to conclude that the Bitcoin market is at a critical stage. Bitcoin is likely to face trouble below key resistance levels going forward until significant demand enters the market.
Bitcoin price at a glance
As of this writing, Bitcoin is worth $84,095, reflecting a price increase of more than 1% over the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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