Cryptocurrencies continued their ‘bloodbath’ on Monday, with some tokens falling back to the lows seen during the October flash crash. ‘Institutional demand for Bitcoin has fallen below the mining rate for the first time in seven months.’
Analysts believe that the shadow of turmoil in the cryptocurrency market in October still lingers, and investors will not easily enter the market until clear signals of price support emerge. Meanwhile, institutional demand for Bitcoin has fallen below the rate of new coin mining for the first time in seven months, a shift that suggests major buyers may be retreating. Additionally, the activation of some previously long-dormant wallets and profit-taking have added some selling pressure to the market.
Under the shadow of the historic deleveraging event in October, the cryptocurrency market is facing a new round of selling pressure. A key indicator shows that demand from large institutional investors is weakening, exacerbating cautious sentiment in the market.
On Monday, the cryptocurrency market remained under pressure as Bitcoin fell below $107,000. The broader altcoin market performed even weaker, with some tokens falling back to their lows during the flash crash in October, when tens of billions of dollars in leveraged positions were liquidated.
A concerning signal is that, according to Charles Edwards, founder of Capriole Investments, institutional demand for Bitcoin has fallen below the rate of newly mined coins for the first time in seven months. This shift suggests that large buyers may be retreating, aligning with other market activities to indicate a risk-averse tone across the entire cryptocurrency market.
Cautious Market Sentiment Amid Cooling Institutional Demand
Bitcoin fell by 4.3% on Monday to around $105,300. Although it is still up about 14% since December of last year, its recent performance has shown clear signs of weakness. Meanwhile, the MarketVector Index, which tracks the bottom 50 assets among the top 100 digital assets, fell for the third consecutive trading day, dropping as much as 8.8%, bringing its year-to-date decline to approximately 60%.
Market participants noted that three weeks after the violent shakeout in October wiped out roughly $19 billion in long positions, its ‘aftereffects’ are still lingering. Jordi Alexander, CEO of Selini Capital, a cryptocurrency trading and market-making firm, stated that the crypto market is in a ‘hangover phase’ following the October liquidation shock. He believes it will take time to rebuild the destroyed capital base, and investor sentiment remains cautious.
Alexander added, “The market must first demonstrate a convincing price bottom before attempting another upward breakout.” In his view, investors will not readily enter the market until clear signals of price support emerge.
In addition to fragile market sentiment, a key technical indicator has also flashed red. Charles Edwards of Capriole Investments pointed out that institutional demand for Bitcoin has slowed, falling below the rate of new coin issuance for the first time in seven months. This data indicates that one of the key drivers behind the market’s previous rally may be waning.
Another Source of Selling Pressure? Profit-taking and ‘Dormant’ Bitcoin Being Activated
Not everyone attributes this round of decline entirely to the market shock in October.
Matthew Kimmell, a digital asset analyst at CoinShares, described this pullback as ‘somewhat perplexing.’ He believes that while the market is ‘still experiencing some aftershocks from the liquidation event,’ other factors deserve attention as well.
Kimmell pointed out that an analysis of Bitcoin’s public transaction records reveals that some wallets that had been inactive for a long time have been activated. ‘These tokens have started moving and are likely re-entering the market, adding some selling pressure as investors take profits,’ he said. ‘This is something I am continuing to monitor closely.’
Jake Hanley, Managing Director of Teucrium ETFs, also believes that the drop in prices is due to ‘people taking profits.’ He noted that the current technical landscape indicates a divided market. ‘Prices led by Bitcoin have been trending downward since the summer, and XRP has also shown a clear downtrend since midsummer,’ Hanley said. ‘In the process, the price itself is signaling that people are cashing in their profits.’
