Bitcoin [BTC] has been in a strong uptrend over the past month or so, but that seems to be taking a break. The bears who formed a sell wall between $87,000 and $91,000 appear to have won the contest in this zone.
That said, leveraged short orders, ETF outflows, long liquidations, and US government potential selling preceded this sharp drop.
What caused Bitcoin to drop below $84K in just minutes?
To start with, four newly created wallets deposited 1 million USDC into Hyperliquid [HYPE]. Then, they opened 40x leveraged short orders on 148.49 BTC worth $12.5 million.
The four positions were valued at either $2.50 million or $2.60 million. The dump in the price of Bitcoin that followed suggested potential insider trading.
Moreover, the US government transferred out another 834 BTC valued at $71.56 million and 40,285 BNB worth $31.63 million. The amount in BTC was deposited into Coinbase Prime, hinting at potential selling, but it has yet to be confirmed on-chain.
Additionally, Spot Bitcoin ETFs posted negative net inflows just before the drop, with the biggest outflow being 994 BTC from ARK 21Shares (ARKB). In total, about 1,059 BTC valued at $91.72 million left BTC ETFs.
However, the weekly netflow remained positive at around $93 million.
Furthermore, a spike in long liquidations played a part, with over $358 million wiped out in the past 24 days. This resulted in a long squeeze, as it represented 84% of all long liquidations amounting to $425 million.
Only $5.67 million in BTC short orders were liquidated.
Altogether, the bearish activities fueled BTC’s drop, coupled with a weaker crypto market. Will the largest crypto continue declining, or will bulls return to push it toward $100K?
Traders stacking short orders
The 15-minute timeframe charts showed Bitcoin‘s structure had flipped bullish after losing $2,000 in 20 minutes.
In fact, bears were stacking more sell orders, as evident in the Aggregated Open Interest, which was rising as the price dropped. This trend usually indicates bearish positioning, as supported by the negative Coinbase Premium.
That way, the Coinbase Premium Index reading meant the US government and its citizens were shorting BTC.
Therefore, BTC needs to reclaim $85,000 as its support to invalidate the short-term bearish structure. Otherwise, Bitcoin will likely continue correcting, with $80,000 or lower as the next focus area.
Still, as sentiment gradually shifts, it remains uncertain how low BTC can drop.
Final Summary
- Bitcoin plunged below $84K after four whales shorted BTC with leverage, long liquidations, US government offloading, and ETF outflows.
- After losing $84K as support, Bitcoin bears are stacking short positions, hinting at more decline.