Bitcoin slumped to as low as $40,280 on Jan. 19, its lowest level since Dec. 12, 2023, before rebounding to $41,979 after four hours of consistent sell pressure that liquidated most long positions on major exchanges.
As of press time, Bitcoin traded at $41,609 after failing to breach $42,000. Meanwhile, long liquidations stood at roughly $30 million and made up 85% of all liquidations over the period, based on CoinGlass data.
Most major cryptocurrencies saw similar price movements and are trading in the red for the day. However, the rebound from a crucial support level indicates resilience as investors continue to buy at that key price level.
Bitcoin has held above the $40,000 threshold despite facing significant sell pressure over the past week after spot ETFs for the flagship cryptocurrency were approved on Jan. 10, resulting in a “sell the news” event.
The ETFs initially caused the price to surge to $49,000 before investors began taking profit on short-term positions, causing the price to dip back to levels seen in mid-December.
Initial speculation blamed the downward pressure on Grayscale, dumping tens of thousands of its Bitcoin on the market. However, data shows that the nine new ETFs — led by BlackRock and Fidelity — have bought up more Bitcoin than GBTC dumped.
Based on available data, Grayscale has sold roughly 60,000 Bitcoin since the ETF began trading, while the “Newborn Nine” have bought roughly 72,000 BTC over the same period. This means that the downward pressure is unrelated to the ETFs, as the newer issuers seem to be actively holding the $40,000 price line.
The nine newly issued spot Bitcoin ETFs are experiencing sustained interest from investors. BlackRock and Fidelity’s ETF have already hit $1 billion in assets under management, equating to more than 25,000 BTC.
Whales taking profit
Crypto Quant Head of Research Julio Moreno said the selling has mainly come from short-term traders who got into positions specifically based around the ETF approval to “buy the rumor” and Bitcoin whales taking profit after a year of gains.
Meanwhile, the dynamics between long-term and short-term Bitcoin investors are becoming increasingly distinct, as evidenced by recent market activities, according to CryptoSlate research.
Long-term holders — typically those who have held Bitcoin for over 155 days, which includes whales — have been observed moving their assets to exchanges to realize profits. This trend emerged around July 2023, when Bitcoin’s value experienced a significant dip from $30,000 to $26,000.
Specifically, on Jan. 17 and Jan. 18, these long-term investors transferred an estimated 25,000 BTC, valued at roughly $1 billion, to exchanges, a move interpreted as cashing in on their investments without suffering losses.
Conversely, short-term Bitcoin holders, those holding their investments for less than 155 days, have shown a more erratic pattern. On Jan. 18, they transferred a substantial amount of Bitcoin, valued at $2.4 billion, to exchanges at a loss.
This indicates a higher activity level among these investors and decreased profits. Particularly, those who had hoped to leverage Bitcoin’s surge to $49,000 seem to have already taken their profits or are facing losses.