Bitcoin (BTC) started the week on a negative trend, with Monday’s steep decline carrying into Tuesday.
After a brief stabilization above $91,000, persistent selling pressure caused BTC to hit new annual lows. By mid-Tuesday, the price had plummeted to $87,081, with daily liquidations exceeding $870 million, as reported by Coinglass.
The wider cryptocurrency market also suffered, with the total market cap decreasing by 8.9% to $3.01 trillion during the same timeframe.
In spite of the downturn, Bitcoin whales took advantage of the situation to increase their holdings. Analysts from IntoTheBlock indicated that large investors purchased about $2.35 billion worth of Bitcoin within hours following the drop.
“Whales are accumulating. A total of 26,430 BTC was transferred to whale accumulation addresses, often associated with OTC transactions and long-term holding,” the analysts stated.
The recent decline in Bitcoin aligns with various factors contributing to selling pressure. Crypto analyst Nic pointed out significant ETF outflows, with total withdrawals amounting to $649 million this week. He also noted that a slowdown in institutional “cash and carry” trades may be contributing to the downward pressure.
Macroeconomic uncertainties further impact the market. Nic mentioned that delays in tariffs against Mexico and Canada could be triggering recent sell-offs. Additionally, Bitcoin’s dip below its 100-day moving average—an essential historical support level—raises concerns. He suggested that BTC might find support around $71,600, which corresponds with the lower standard deviation of the short-term holder (STH) cost basis.
Former BitMEX CEO Arthur Hayes expressed his perspective on the situation, linking the drop to ETF liquidations and hinting at possible further declines for Bitcoin.
“Bitcoin may be headed for a downturn: Many $IBIT holders are hedge funds that have gone long on ETF and short on CME futures to achieve a yield exceeding that of short-term US treasuries,” Hayes tweeted. “If the basis declines as $BTC decreases, these funds will sell $IBIT and repurchase CME futures. These institutions are in profit, and since the basis is close to UST yields, they will unwind during US trading hours to secure gains. $70,000, I’m looking at you.”
Nevertheless, some analysts maintain a cautiously optimistic outlook. On Monday, Darkfost from CryptoQuant observed that the 30-day retail demand indicator has returned to the neutral zone at 0%, a change that typically precedes price recoveries.
“This indicates a notable shift from the previously highly negative reading of about -21%, a level not reached since 2021. Interestingly, previous instances of recovering retail demand have often been accompanied by short-term price increases (over several weeks or months).” He commented.
In other updates, analyst Rekt Capital emphasized the necessity for Bitcoin to reclaim the $96,700 level by the end of February. He stated that a monthly close above this threshold would validate a breakout from the bullish flag pattern, potentially laying the groundwork for a renewed upward trend.
At the time of writing, BTC was priced at $87,098, showing a 7.60% decrease in the past 24 hours.
