Bitcoin dips to $107K, according to analysis by NYDIG, indicative of the market appearing less overheated than initial impressions might suggest.
The cryptocurrency market experienced a substantial selloff during U.S. trading hours on Wednesday, with Bitcoin miners leading the declines in crypto-related stocks.
The ongoing selloff can be attributed to a combination of macroeconomic factors, market dynamics, and specific activities of bitcoin miners and long-term holders.
Economic uncertainty surrounding the imminent release of the U.S. Personal Consumption Expenditures (PCE) inflation data and discussions between Fed Chair Powell and President Trump have contributed to cautious trading. Additionally, the downturn in the U.S. dollar index and fluctuations in U.S. 10-year Treasury yields have failed to dampen the falling prices of Bitcoin and Ethereum.
The broader crypto market is also grappling with a cooling enthusiasm, with nearly 80% of the top cryptocurrencies declining in value.
The expiry of monthly crypto options has intensified the selloff by triggering forced liquidations, leading to losses totaling over $750 million. This process can amplify market volatility, causing traders to close positions rapidly, further exacerbating price drops.
On-chain data suggests that long-term Bitcoin holders, those with holdings between 1–5 years, are actively selling coins to capitalize on recent price highs. This increased selling pressure has contributed to the short-term price pullback.
While not explicitly detailed, it is common for bitcoin miners to sell their holdings during selloffs to cover operational costs, such as electricity and hardware expenses. This selling behavior can negatively impact both the price of Bitcoin and the stocks of mining companies, which tend to mirror the market's downward trend.
Analysts view the current movement as a consolidation phase following Bitcoin's failure to break through strong resistance levels near $111,000. Technical signals indicate a potential trend reversal, and the Crypto Fear & Greed Index has dropped from 74 (greedy) to 60 (neutral to slightly bearish), reflecting a shift toward more cautious market sentiment.
While some analysts anticipate a temporary dip and subsequent bull run, the timing and extent of the next bull move remain uncertain due to ongoing liquidation risks and bearish divergences. If upcoming economic data supports a risk-on sentiment and moderates inflation concerns, it could potentially restore bullish momentum to the cryptocurrency market.
The expiry of monthly crypto options and the selling behavior of bitcoin miners have amplified the ongoing selloff in the cryptocurrency market, with a combination of macroeconomic factors, market dynamics, and activities of long-term holders contributing to the downturn. Moreover, the cooling enthusiasm towards the broader crypto market has seen nearly 80% of the top cryptocurrencies declining in value due to increased selling pressure from long-term holders.
