Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin experienced significant selling pressure, pushing its price to near two-week lows at the Wall Street open on Tuesday, as over $100 million in long positions were liquidated in a single hour. The downturn, which saw BTC briefly touch $113,500, highlights a “palpable” downward pressure, with market participants closely watching Bitcoin exchange-traded fund (ETF) flows amid weakening on-chain fundamentals.
Market Dynamics and Liquidations
Data from Cointelegraph Markets Pro and TradingView indicated that BTC/USD dropped below $114,000, aligning with a broader decline in US stocks, including a 1.2% fall in the Nasdaq Composite Index. The ongoing squeeze on long Bitcoin positions resulted in an additional $116 million in liquidations within an hour, according to CoinGlass data. Bids were observed accumulating around the $112,000 mark, signaling a key area of interest for traders.
Analyst Insights on Price Action
Keith Alan, co-founder of trading resource Material Indicators, noted that the current price action is “not a sign of strength” for Bitcoin. He emphasized that the $107,000 to $110,000 range is now a critical focus, with bulls attempting to establish a foothold against the evident downward pressure. Alan identified the 100-day simple moving average (SMA) at $110,950 as a potential support level, while reclaiming the 50-day SMA at $115,875 is crucial for recovery.
Material Indicators also highlighted a substantial $25 million band of liquidity at $105,000 on exchange order books, referring to it as “plunge protection.” This level could serve as a significant barrier against a more severe market decline, offering a potential floor for prices.
ETF Demand and On-Chain Signals
In its latest Market Pulse update, on-chain analytics firm Glassnode pointed to a growing divergence between institutional demand and Bitcoin’s price performance. Despite “weakening” on-chain signals, such as declining volume, investment vehicles—particularly US spot Bitcoin ETFs—have continued to see inflows. However, the sustainability of these institutional flows and renewed buyer conviction in both spot and futures markets are now paramount.
The firm suggested that these factors will determine whether the current market contraction stabilizes into new upward momentum or extends into a deeper consolidation phase. Data from UK investment firm Farside Investors revealed a net outflow of $121 million from Bitcoin ETFs on Monday. Notably, BlackRock’s iShares Bitcoin Trust (IBIT), the largest ETF offering, experienced its first outflows since August 5, marking a significant shift in institutional sentiment.
Bitcoin continues to face significant selling pressure and liquidations, with key support levels at $110,950 and $105,000 being closely watched by analysts. The market’s future direction appears heavily reliant on the resilience of institutional demand and the ability of Bitcoin ETFs to maintain positive inflows amidst weakening on-chain fundamentals.
