Bitcoin has experienced a notable decline, dropping nearly 4% from its Thursday high of $103,690 to under $99,000. This downturn reflects a broader retreat in equities as traders reassess risks after the recent U.S. government shutdown.
Over the past month, long-term Bitcoin holders have sold approximately 815,000 BTC, causing selling pressure to reach its highest point since early 2024. This accelerated distribution among long-term holders is highlighted in a report from Glassnode, which emphasizes a sharp decline in the supply held by these investors. CryptoQuant also noted that this selling surge occurred during a time of contracting demand.
The weakening of spot-market demand is further illustrated by notable outflows from Bitcoin exchange-traded funds (ETFs), a negative premium on Coinbase, and limited buying activity to support the ongoing sell-off. Charlie Shery, finance head at Australian crypto exchange BTC Markets, pointed out that while individual whale sell-offs may not be concerning, the current lack of strong buying support exacerbates the situation.
Ryan McMillin, chief investment officer at Merkle Tree Capital, highlighted that the recent downturn parallels a decline of around 2% in the Nasdaq, with investors coming to terms with the residual impacts of the shutdown. The short-term funding bill has only provided temporary relief, and there are concerns regarding economic data that has been compromised by the shutdown, which the White House confirms will affect the release of October’s jobs report.
Market sentiment appears to be shifting towards caution, as participants reassess their risk appetites. Predictions on the Myriad prediction market, owned by Decrypt’s parent company Dastan, indicate a 56% chance of Bitcoin reaching $115,000 before dropping to $85, a decrease from Wednesday’s 68%.
Without strong support from previous demand sources like ETFs and MicroStrategy, Bitcoin’s price may be vulnerable. McMillin warned that if the $98,000 level fails to hold, the cryptocurrency could potentially retreat into the $90,000 range, reminiscent of movements seen in June.
While uncertainty looms over the market, the hope remains that clearer signals from economic indicators could eventually guide Bitcoin’s recovery and stabilize its value, offering renewed strength to both cryptocurrencies and traditional equities.