Bitcoin Trades Face Heavy Sell-Offs

Bitcoin‘s recent performance has been marked by volatility, as the digital currency dropped from a mid-July high of $123,000 to $112,000 in two weeks, breaching the critical supply zone at $116,000. Insights from Glassnode show that around 120,000 BTC changed hands during the downturn on July 31, with the price struggling to regain its previous support levels. These shifts have sparked concerns over short-term investor confidence, particularly if the price remains under the $116,000 mark.

Why Is There Pressure on Short-term Traders?

Investors who acquired Bitcoin one to three weeks ago have an average purchase cost of $116,900, creating a barrier to further appreciation. This investor group’s profitability has dipped significantly from 100% to 70%, indicating the transition to a typical mid-cycle phase. A further fall could amplify the unprofitable supply, thereby eroding confidence. As Glassnode put it,

“As the correction deepens, the supply in loss may rise, gradually weakening confidence.”

The notable volume of 120,000 BTC sold on July 31 suggests that some investors are looking to acquire Bitcoin at reduced prices, despite the lack of broader market support. However, looming large-scale sell-offs are anticipated, mainly from those capitalizing on July’s peak profits. The market is now eyeing a return to $110,000 in the near term.

What Is Influencing ETF and Leverage Trends?

On August 5, U.S. spot Bitcoin ETFs witnessed the largest daily outflow of 1,500 BTC in three months. However, this downturn reversed mid-week, seeing a net inflow of $91.5 million manage by key players such as BlackRock, Bitwise, and Grayscale. Nonetheless, caution is advised regarding potential fresh exit waves impacting ETFs.

In contrast, futures markets have shown a decrease in leverage, as funding rates fell below 0.10%. Data from Derive.xyz indicated a negative shift in the 30-day options curve, reflecting a strategy of hedging against declines. Glassnode remarked on the lack of a sharp sell-off or strong recovery outlook, describing the current scenario as uncertain following previous record highs.

As reported by CryptoAppsy, Bitcoin was trading at $116,455 at the time of this report, noting a 2.14% increase over the last day. Despite the rebound, the price remains below the key resistance level of $116,900, coinciding with the news of a new executive order by Donald Trump. The order paves the way for 401(k) retirement plans to invest in alternative assets, including crypto.

• Bitcoin slipped from $123,000 to $112,000 within two weeks.
• 120,000 BTC were traded on July 31, highlighting investor interest at lower prices.
• ETF outflows marked the largest in three months, later reversing to a $91.5 million inflow.
• Futures markets saw a decrease in leverage, with funding rates dropping below 0.10%.

Bitcoin’s current positioning below the critical $116,900 resistance emphasizes the importance of monitoring market trends, investor reactions, and regulatory changes. The evolving dynamics in ETF and futures markets, alongside geopolitical shifts, are pivotal elements in anticipating Bitcoin’s next moves.