Bitcoin (BTC) drops below $57K again amid strong selling pressure
Bitcoin has fallen below $57k due to major institutional selling and market pressure. Short-term holders face unrealized losses, which can lead to market volatility if they decide to cut their losses. $51K is a critical support level and long-term investors may see this as a buying opportunity.
Bitcoin (BTC) has once again dropped below $57,000 as the rally continues. At press time, BTC is at $56,749.40, down 5.32% on the week.
This recent shakeout has been driven by a combination of factors, including significant institutional selling, pressure from short-term holders to avoid losses, and a continued selloff in the spot market.
Institutional selling affects the price of Bitcoin.
The main reason behind Bitcoin's price decline is the massive selling activity by institutional investors. Famous players such as Fidelity, Grayscale, Ark Invest and Ceffu contributed significantly to the downward pressure.
He leads Loyalty by selling 16,000 BTC worth about $915 million. Grayscale is worth about $858 million after loading 15,000 BTC. Ark Invest released 7,000 BTC worth about $400.4 million, while Sefu sold about 3,124 BTC, for a total of around $178 million.
Institutions have been dumping BTC 🚨 since August 👇 🔻 Fidelity sold 16000 BTC worth $915 million.
🔻 Arch Invest sold 7,000 BTC worth $400.4 million
🔻 Grayscale sold 15,000 BTC worth $858 million.
🔻 Along with this, Sefu sold around 3124 BTC worth… pic.twitter.com/4PlbMcGDLH
— Wise Advice (@wiseadvicesumit) September 5, 2024
This institutional sell-off has been a critical factor in Bitcoin's downfall. Transfers of Bitcoin to exchanges suggest that these major players are taking profits or adjusting their portfolios.
Interestingly, while these institutions are actively selling, BlackRock has maintained a neutral stance by refraining from buying or selling Bitcoin in the current market turmoil.
The risk of short-term holders exiting positions en masse
The selling pressure has been exacerbated by the situation of short-term Bitcoin holders, who are currently experiencing significant unexpected losses.
According to data from Glassnode, short-term holders who bought bitcoin in the past six months are experiencing financial stress, with their average cost ranging from $59,000 to $65,200, which is significantly higher than the current market value.
The financial pressure of this group is evident in key metrics, and their ability to exit positions in bulk poses a significant threat to market volatility.
Although the average Bitcoin investor remains profitable, the insignificant losses among short-term holders could create broader market weakness if they decide to cut their losses.
The price level of $51,000 stands out as an important support to maintain the current market structure.
Can stabilize the market
As Bitcoin continues to experience strong selling pressure, its market behavior reflects a complex interplay of institutional actions, short-term holding dynamics, and broader market conditions. While immediate prospects look uncertain, especially the possibility of a further short-term downturn, long-term investors may find value in this correction period.
Analysts have observed some absorption at lower price levels, which may suggest that Bitcoin may be poised to move sideways for some time before taking a decisive action.
Spot is still selling here but at the same time we are seeing some signs of absorption in the lows. Maybe some will cut through the lows here for the next few days before we're ready for a real break.
Looking for some different PA with possible differences above/below the blue lines… pic.twitter.com/mGfyiQZLqI
— CrediBULL Crypto (@CredibleCrypto) September 5, 2024
The current dip may present a buying opportunity for long-term investors who can handle short-term volatility.
