Bitcoin price crashes below $93,000: Top three reasons

The crypto market experienced a significant setback today as Bitcoin price fell below the $93,000 threshold. After Binance hit an all-time high of $99,588 last Friday, the leading cryptocurrency has fallen over 6% to hit a low of $92,326. In the last 24 hours alone, the Bitcoin price has fallen by 3.6%. Analysts attribute this decline to three main factors:

#1 Massive Bitcoin Profit Taking

As Bitcoin approached the critical resistance level of $100,000, many long-term holders began taking profits, resulting in increased selling pressure. James “Checkmate” Check, former chief on-chain analyst at Glassnode, noted that long-term holders have distributed $60 billion worth of Bitcoin supplies in the last 30 days.

“Long-term Bitcoin holders have distributed $60 billion worth of supplies in the last 30 days. Of the total LTH supply moved since the FTX bottom, 21% happened in November. “This is the strongest profit-taking we have seen so far this cycle,” Check writes of X.

He also points out that the selling pressure is not coming from “OGs,” but that holders who bought at the previous high of $68,000 sold 198,000 BTC in November alone. This suggests that investors who endured the last major correction are now capitalizing on the recent price increase as Bitcoin approached unknown price territory.

#2 Long liquidation event

Significant liquidations occurred in the futures market, amplifying the Bitcoin price crash. Data from Coinglass shows that total liquidations in the last 24 hours reached $577.39 million, with long positions accounting for $468.98 million.

Singapore-based QCP Capital commented on the situation: “Since our last comment, Bitcoin has fallen below $93,000, with over $430 million in long-term liquidations.” They noted that this decline coincided with Spot ETFs ended their five-day streak of net inflows, recording outflows of $438 million on Monday, while shares of MicroStrategy fell another 4.4%.

QCP Capital also mentions that “the pullback follows MicroStrategy’s record $5.4 billion purchase of BTC last week.” As the US holidays approach and there were no immediate catalysts to support the As prices soared, they noted that Bitcoin’s path to the symbolic $100,000 mark had stalled.

The firm also notes a shift in market sentiment: “ETH’s implied volatility has shifted sharply toward puts rather than calls, reflecting similar sentiment for BTC as the market takes a breather.” The growing concern about downside risks could be particularly in light of the upcoming FOMC minutes tonight and PCE data on Wednesday.”

Despite the downturn, they offer a balanced perspective: “To put things in perspective, this is not an excessive decline. Bitcoin is merely falling back to levels seen at the beginning of last week. The market has been extremely overbought and excessively leveraged since the election, so a pause was inevitable.”

#3 Coinbase Premium is disappearing

Coinbase’s premium gap, a key indicator of institutional demand in the US, has disappeared. While Bitcoin rose towards $100,000, the premium gap was particularly high on Coinbase, reaching +$224 on November 22nd. This was driven by strong inflows into US Bitcoin ETFs and heavy buying by MicroStrategy, which acquired 55,500 BTC for $5.4 billion over the weekend.

However, this scenario changed dramatically yesterday. On-chain analyst Maartunn (@JA_Maartun) points out today: “MicroStrategy has single-handedly held the market. The Coinbase premium gap created by Saylor’s buying spree disappeared and the market began to collapse.”

Charles Edwards, CEO of Capriole Investment, points out the immense selling barrier around the $100,000 mark. He noted that despite the massive $5.5 billion purchase of MicroStrategy, they “only dented the world’s largest letter wall by about 25%.” This highlights the significant selling interest at the $100,000 level, which has proven to be a formidable hurdle.

The falling premium on Coinbase also reflects lower buying pressure in US markets, a factor also evident in spot Bitcoin ETF outflows. Yesterday, spot ETF flows were negative by $435.3 million.

While BlackRock saw inflows of $267.8 million, other major ETFs saw significant outflows: Bitwise lost $280.7 million, Grayscale BTC Trust (GBTC) saw outflows of $158.2 million , Fidelity suffered redemptions of $134.7 million and ARK Invest lost $110.9 million.

At press time, BTC was trading at $92,422.

Featured image created with DALL.E, chart from TradingView.com