Cryptocurrency

Bitcoin Price Drop: Does 8% Dip Affect Chances of Reaching $100K

AifrontierFebruary 4, 2025February 7, 202507 mins

Table of Contents

Introduction

On November 22nd, Bitcoin (BTC) reached an all-time high of $99,609, only to experience a 8.2% pullback over the next four days. This correction resulted in $250 million in liquidations of bullish leveraged positions but did not induce panic or push key metrics into bearish territory.

The Price Correction: A Sign of Excessive Leverage?

To put this decline into perspective, the 22.6% price surge between November 9th and November 13th resulted in $342 million in buyer liquidations through BTC futures contracts. This data suggests that the latest price correction may not necessarily signal a trend reversal but rather reflects temporary excessive leverage among derivatives traders.

The Role of Bitcoin Miners: A Crucial Indicator

To assess whether the inability to breach the $100,000 psychological threshold affected investor sentiment, it is essential to evaluate Bitcoin miners’ activity. These entities collectively hold approximately 1.8 million BTC – valued at over $166.3 billion – and are responsible for releasing 3.125 BTC per mined block.

Miners’ Net Position Change: A Red Flag?

Recent data reveals that miners have been reducing their Bitcoin positions at a rate of approximately 2,500 BTC per day, equivalent to $231 million. In contrast, US Bitcoin spot exchange-traded funds (ETFs) recorded an average daily inflow of $670 million between November 18th and November 22nd.

The Insufficiency of Miners’ Selling Pressure

While some might attribute the failure to surpass the $100,000 level to miner selling, this explanation appears insufficient. Notably, MicroStrategy announced a $5.4 billion Bitcoin acquisition on November 25th, demonstrating robust institutional demand.

Long-term Holders: A Contributing Factor to Selling Pressure?

Historical patterns show similar behavior in late March, following multiple failed attempts to breach the $73,500 mark. Profit-taking by some whales triggered a two-month correction, culminating in Bitcoin hitting a low of $60,830 on May 1st.

The Potential for a $82,500 Bottom

If historical trends hold, Bitcoin’s price may bottom around $82,500 – a standard 17% correction from its all-time high and far from signaling a bear market. In comparison, during the correction between March 14th and May 16th, US spot Bitcoin ETF holdings showed little change, and MicroStrategy made a single purchase of 24,400 BTC.

Growing Corporate Adoption: A Support Level for Bitcoin’s Price?

This time, the landscape differs significantly. Spot ETF buying remains strong, with additional institutional players mirroring MicroStrategy’s approach. Among these are Japan’s MetaPlanet, Semler Scientific in the US, and Marathon Digital, a leading global Bitcoin miner. This coordinated activity suggests growing corporate adoption, which could provide a solid support level for Bitcoin’s price.

The Options Market: A Neutral Sentiment Indicator

Although it is uncertain whether these entities will maintain their Bitcoin acquisition pace, the fact that Microsoft shareholders are reportedly debating a similar strategy further bolsters market confidence.

Hedging Costs and Put-to-Call Ratio

If whales and arbitrage desks anticipate a sharp price decline, hedging costs rise, pushing the put-to-call ratio above 6%. A key metric here is the 25% delta skew, which typically ranges between -6% and +6% in neutral markets. A skew outside this range suggests heightened fear or excessive optimism.

Conclusion

Data from the options market underscores this resilience. The bullish sentiment observed between November 16th and November 26th has faded, as put (sell) and call (buy) options now trade at similar premiums, indicating a shift to neutral sentiment. However, on-chain metrics and derivatives show no signs of stress or indication of a looming bear market, pointing to a bullish price outlook for Bitcoin.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Note

The cryptocurrency market is known for its volatility, and prices can fluctuate rapidly due to various factors such as market sentiment, technical analysis, and fundamental analysis. The information provided in this article should not be considered as investment advice, but rather a general overview of the current market situation. It is essential to do your own research and consult with financial experts before making any investment decisions.