2:00 p.m. ▪ 6 min reading ▪ by Luc Jose A.
As Bitcoin appears to be slipping below $70,000, a wave of panic is setting in among short-term speculators. In the space of a few hours, nearly 54,000 BTC, or approximately $3.76 billion, were transferred to exchange platforms, which constitutes one of the largest sales movements of these recent months. This massive influx of assets reflects negative dynamics for the market, particularly among short-term holders who, faced with volatility, choose to liquidate their positions. Such a situation does not only result from a momentary adjustment of the market, but from a feeling of precipitation which calls into question the future evolution of the price of the flagship crypto.
A massive influx of BTC to exchanges: the signal of short-term panic
On October 31, crypto exchange platforms recorded a massive influx of BTC from short-term speculators. According to data from analytics firm Glassnode, more than 54,000 BTC have been transferred to these platforms, a figure that represents approximately $3.76 billion. Glassnode specifies that this sudden increase in transactions on exchanges constitutes the largest movement observed since April, a situation which highlights a growing panic within the cohort of short-term holders, called STH (“short-term holders”) . Faced with the price falling below the psychological threshold of 70,000 USD, these investors reacted in a “reactionary” manner, because they seek to limit their losses. For the most part, these are portfolios that have held their BTC for less than 155 days, an investor profile that is generally less stable and more quick to react to sudden fluctuations.
On-chain indicators reveal that this liquidation did not take place under advantageous conditions for sellers. Thus, the net profit ratio, or SOPR (Spent Output Profit Ratio) of STHs, has fallen below 1, a threshold which indicates a neutral balance. Additionally, with a SOPR below 1, many speculators are in effect selling their assets at a loss, as they hope to limit a potential collapse as volatility signals increase. “This fall in the SOPR demonstrates a loss of confidence among these short-term investors,” note Glassnode. Indeed, they are geared towards hasty sales in the face of an ongoing correction, but with no prospect of an immediate rebound.
Outlook for the global market
This massive withdrawal of BTC by short-term speculators could prove significant for the medium-term stability of the Bitcoin ecosystem. Indeed, with this influx of coins on the exchange platforms, the risk of “deviation” of the price towards lower levels persists. According to CoinGlass, monitoring of order books shows that selling liquidity is accumulating around the $68,000 levels, creating a potential area of resistance. This pressure could slow down a possible rebound, and make the situation all the more delicate for traders hoping for a rapid recovery in the price. For some observers, this volatility is exacerbated by exogenous factors, notably economic fears around the impending US elections and new employment data which influences risky markets.
In the current context, the outlook for Bitcoin remains uncertain, and investors are advised to exercise caution. Keith Alan of Material Indicators, and crypto analyst, recalls that similar episodes of “derisking” before the elections were observed in 2016 and 2020. He emphasizes that “the price never retested the low levels established the week preceding the election. ‘election’, a trend that could offer a glimmer of optimism. However, vigilance is required, as a rapid market turnaround remains unlikely. Historical trends and key economic indicators suggest a fragile dynamic that could extend beyond the electoral deadlines.
The recent massive sell-off orchestrated by short-term speculators sheds more light on the volatility inherent in Bitcoin and, more broadly, cryptos. This wave of sales could certainly offer buying opportunities for more resilient investors, but it also highlights the risks linked to speculative movements. In an uncertain global environment, where economic policy and international events heavily influence these assets, it is essential to keep in mind that patience and a long-term strategy could pay off for those seeking to navigate this storm.
Luc Jose A.
A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this ongoing revolution.
