Bitcoin began the week with a sharp drop below $86,000, with on-chain data indicating a pattern where large wallets slow down their buying pace while smaller wallets increase their buying. Analysts note that this divergence is typically seen when the market enters “late-cycle vulnerability.”
Onchain data shows that long-term investors and large wallet holders have slowed significantly in recent weeks, while smaller wallets holding less than 1 BTC have viewed the recent declines as buying opportunities. Timothy Misir, Head of BRN Research, described this pattern as “classic late-cycle behavior” and warned of increasing short-term vulnerability.
The liquidity shock, which saw Bitcoin plummet to $85,600 in Asian trading, wiped out $144 billion from the total crypto market. Coinglass data shows that over $600 million worth of positions were liquidated in the last 24 hours, $567 million of which came from long positions.
The decline is believed to have been triggered by macroeconomic pressures originating in Asia. Hawkish statements from Bank of Japan Governor Kazuo Ueda pushed up Japanese bond yields and bolstered expectations of a December interest rate hike. China’s services PMI, which fell into contraction territory for the first time in three years, also dampened risk appetite.
Meanwhile, the end of monetary tightening in the US, the increasing likelihood of a year-end interest rate cut, and the $1 billion weekly inflow into crypto investment products all point to a supportive macro backdrop. Despite this positive outlook, prices remained indifferent.
Analysts emphasize that for Bitcoin to regain stability, it needs to reclaim the low $90,000 range and ETF and on-chain inflows must turn significantly positive.
*This is not investment advice.