Bitcoin Price Crashes Below $93,000: Top 3 Reasons

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As a seasoned crypto investor with over a decade of experience in this rollercoaster ride of a market, I’ve learned to expect the unexpected and embrace volatility. Today’s Bitcoin dip below $93,000, while disappointing for those who just entered the market at the peak, is hardly surprising for someone like me who has witnessed similar dips before.

Today saw a notable downturn in the crypto market, with the value of Bitcoin dipping below the $93,000 mark. Having peaked at $99,588 on Binance last Friday, Bitcoin has experienced a 6% drop, reaching a low of $92,326. In just the past day, its price has fallen by 3.6%. Experts suggest three primary reasons for this decline:

#1 Massive Bitcoin Profit-Taking

Approaching the significant price point of $100,000, long-term Bitcoin investors started cashing out, causing an uptick in selling activity. James “Checkmate” Check, a former leading on-chain analyst at Glassnode, pointed out that over the past 30 days, these long-term holders have unloaded approximately $60 billion worth of Bitcoin.

Over the past month, Bitcoin Long-Term Holders have dispensed a staggering $60 billion from their holdings. Interestingly, around one fifth of all LTH supply moved since the FTX bottom has occurred in November alone. This represents the most significant profit-taking we’ve seen during this cycle, according to Check’s analysis via X.

Additionally, he highlights that the selling force isn’t originating from original investors (OGs), but rather those who had purchased Bitcoin at its peak of $68,000 and subsequently sold 198,000 BTC during November. This implies that investors who weathered the previous significant correction are now cashing in on the recent price spike as Bitcoin nears unprecedented price levels.

#2 Long Liquidation Event

Over the last day, there have been significant sell-offs in the futures market for Bitcoin, intensifying its price drop. According to Coinglass, these sell-offs resulted in a total of approximately $577.39 million being liquidated, with long positions making up around $468.98 million of that amount.

In simpler terms, QCP Capital, based in Singapore, noted that the price of Bitcoin had fallen below $93k since their previous commentary, leading to over $430 million in long positions being liquidated. This drop occurred at the same time as spot ETFs ended a five-day streak of inflows, experiencing a $438 million outflow on Monday. Additionally, they pointed out that MicroStrategy’s stock decreased by 4.4% further.

According to QCP Capital, there’s been a dip in Bitcoin prices since MicroStrategy made its massive $5.4 billion Bitcoin purchase last week. With upcoming US holidays and no immediate factors pushing prices up, they suggest that Bitcoin’s journey towards the significant $100,000 mark has temporarily halted.

The company also observes a change in investor attitude: “The implied volatility of ETH has significantly leaned towards put options rather than call options, mirroring similar feelings in BTC as the market temporarily pauses. As investors grow more worried about potential losses, this concern may increase further with tonight’s FOMC minutes and Wednesday’s PCE data approaching.

Regardless of the current dip, they offer a well-balanced view: “To clarify, this isn’t an extreme drop. In fact, Bitcoin is just returning to levels it was at earlier in the week. The market had been heavily overbought since the election, with excessive borrowing, so a pause in growth was bound to happen.

#3 Coinbase Premium Disappears

The significant difference in price between Bitcoin traded on Coinbase compared to its market value, a crucial sign of U.S. institutional appetite for Bitcoin, has disappeared. As Bitcoin approached a potential $100,000, this premium gap on Coinbase was particularly high, peaking at an excess of $224 on November 22. This surge was primarily due to substantial investments into U.S.-based Bitcoin ETFs and massive Bitcoin purchases by MicroStrategy, who acquired 55,500 BTC for approximately $5.4 billion over the weekend.

Yesterday saw a significant change in the scenario under discussion. As noted by on-chain analyst Maartunn (@JA_Maartun) today, MicroStrategy appears to have single-handedly supported the market. The premium gap between Coinbase, fueled by Saylor’s buying spree, disappeared, leading the market to decline.

As an analyst, I’m drawing attention to Charles Edwards’ observation regarding the substantial sell wall hovering around the $100,000 mark, as CEO of Capriole Investment. He pointed out that even with MicroStrategy’s colossal $5.5 billion acquisition, they merely reduced the world’s largest ask wall by approximately 25%. This emphasizes the considerable selling interest at the $100,000 level, which has proven to be a robust obstacle in the Bitcoin market.

The diminishing premium on Coinbase also reflects reduced buying pressure from US markets, a factor also evident in the outflows from spot Bitcoin ETFs. Yesterday, spot ETF flows were negative by $435.3 million.

As a researcher examining the latest data, I noticed an interesting trend: While BlackRock’s ETF attracted inflows amounting to $267.8 million, some other major players in the field experienced substantial outflows. For instance, Bitwise recorded losses of $280.7 million, Grayscale BTC Trust (GBTC) faced outflows totaling $158.2 million, Fidelity’s ETF saw redemptions worth $134.7 million, and ARK Invest experienced a loss of $110.9 million in this period.

At press time, BTC traded $92,422.

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2024-11-26 15:12