As Bitcoin, the largest cryptocurrency by market capitalization, continues its downward trend, dropping from approximately $65,000 to $62,700, concerns are mounting about increased selling pressure that could drive its value even lower. This development follows a period of sharp price volatility, creating uncertainty among investors and raising alarms in the crypto sector.
A recent analysis from CryptoQuant, shared by crypto trader and on-chain analyst XBTManager, highlights the potential return of sellers in the Bitcoin market. The data suggests a resurgence of selling activity following recent price fluctuations, signaling a shift in investor sentiment. Last week, Bitcoin experienced a significant surge, breaking out of its previous range and encountering extreme volatility. However, the subsequent price decline suggests a potential pullback, raising concerns about sustained downward pressure.
The analyst also noted that previously inactive networks have started to show signs of activity. Data from short-term holders, specifically those with 1-week to 1-month spent output, indicates that over 33,155 BTC have been moved. This movement could lead to immediate selling pressure, which, if intensified, may significantly impact Bitcoin’s price. Investors are advised to exercise caution and closely monitor these developments in the coming days.
In addition to the price drop, Bitcoin’s Open Interest (OI) has also seen a notable decline across all exchanges. Market intelligence platform Santiment reported that a 2.2% decrease in BTC’s price over the last day led to a significant 7.5% reduction in total open interest on exchanges.
Interestingly, altcoins like Ethereum (ETH) and Solana (SOL) have yet to experience a comparable drop in open interest. Santiment suggests that traders might shift their focus from Bitcoin to these altcoins, which have shown signs of recovery since the market meltdown on August 5. This shift could indicate traders see more potential in altcoins, leading to capital rotation away from Bitcoin.
Santiment also points out that traders may reduce their exposure to Bitcoin due to the current uncertainty, resulting in a shift in market sentiment. The lack of sensitivity in ETH and SOL’s open interest compared to BTC this month further supports this observation, suggesting a potential change in the crypto market dynamics.
