Bitcoin Faces Volatility as Price Drops Below $85,000 Amid Market Uncertainty

The cryptocurrency market is currently experiencing significant turbulence, with Bitcoin (BTC) facing sharp declines despite an initial upward push in the previous week. This downturn has triggered a drastic shift in investor sentiment, increasing uncertainty regarding Bitcoin’s near-term trajectory.

Bitcoin’s price recently fell below the $85,000 mark after attempting to stabilize around that level. The sudden drop has led to increased bearish pressure, affecting both institutional and retail investors. Market analysts suggest that ongoing volatility could lead to further corrections, raising concerns about Bitcoin’s ability to regain key resistance levels in the short term.

Bitcoin’s Long-Term Holders Halt Massive Distribution Phase

Amid Bitcoin’s struggle to maintain higher levels, an interesting trend has emerged among long-term holders. These investors, who typically accumulate and hold Bitcoin for extended periods, have notably reduced their selling activity. This shift could indicate a potential bullish reversal as selling pressure from these holders diminishes.

Prominent on-chain and macro researcher Axel Adler Jr. recently highlighted this shift in sentiment among Bitcoin investors. According to his research, long-term holders appear to have completed their distribution phase, a move that might set the stage for renewed bullish momentum in the market.

What Is the Distribution Phase and Why Does It Matter?

The distribution phase refers to a period when long-term holders begin selling off a significant portion of their holdings, typically to realize profits. This often leads to increased market supply, driving prices downward. The fact that this phase is ending suggests that long-term holders are no longer actively selling, potentially reducing selling pressure and stabilizing Bitcoin’s price.

Key Observations from Axel Adler Jr.:

• Long-term holders have undergone the largest distribution phase in recent years.
• Activity metrics show a transition from high selling pressure to accumulation mode.
• The decrease in Bitcoin supply could signal the beginning of a new market cycle.
• If demand for Bitcoin increases, it could lead to a supply squeeze, potentially pushing prices higher in the coming weeks.

How Much Bitcoin Has Been Sold?

According to Adler’s research, long-term Bitcoin holders have distributed over 1.715 million BTC since Bitcoin reached the $60,000 price level. This large-scale sell-off contributed to Bitcoin’s recent downward trend, but now that selling has significantly slowed, it may create a more favorable market structure for a potential rebound.

A key metric known as the 30-day Net Position Change of Long-Term Holders has returned to neutral levels. This suggests that the mass-selling pressure from large investors has subsided, potentially signaling a market bottom. If this trend continues, Bitcoin could experience a period of price stabilization followed by an upward move as new buyers enter the market.

Bitcoin Selling Pressure on Crypto Exchanges Declines

Despite Bitcoin’s price correction, many investors and traders have become increasingly bullish on the asset’s future outlook. This renewed optimism is reflected in the declining selling pressure on major cryptocurrency exchanges.

Declining Exchange Inflows: A Bullish Indicator?

A key metric that analysts use to gauge selling activity is exchange inflow volume. When Bitcoin holders transfer large amounts of BTC to exchanges, it often signals their intention to sell. However, recent data shows that this trend has slowed, further reducing downward pressure on Bitcoin’s price.

Axel Adler Jr. noted the following developments in exchange-related selling activity:

• Active selling by long-term holders has ended on crypto exchanges.
• The monthly Moving Average inflow of Bitcoin to exchanges has dropped from 3.8% to 1.4%.
• A lower percentage of Bitcoin supply is now available for immediate selling, suggesting a more stable price environment.

Bitcoin’s Current Price and Market Sentiment

At the time of writing, Bitcoin is trading at approximately $81,995, marking a 5% decline in the last 24 hours. Despite this drop, there is a noticeable increase in trading volume, which has surged by over 24% in the past day. This indicates that many investors are taking advantage of the price dip to accumulate more Bitcoin, a behavior commonly seen before market reversals.

Will Bitcoin Rebound?

While the market remains uncertain, the combination of reduced long-term holder selling, declining exchange inflows, and increased trading activity suggests that Bitcoin could be approaching a local bottom. If demand continues to rise while supply remains limited, Bitcoin could experience a recovery phase in the coming weeks.

Macro Factors Affecting Bitcoin’s Price Movement

Beyond on-chain metrics, several macro-level economic factors are influencing Bitcoin’s price trajectory. These include:

1. U.S. Economic Policy and Inflation Reports

This week, the U.S. is set to release two key inflation reports, which could significantly impact Bitcoin’s price. If inflation remains high, the Federal Reserve might consider further interest rate hikes, which could lead to increased volatility in both traditional and crypto markets.

2. Institutional Activity and Bitcoin ETFs

The introduction of Bitcoin ETFs has played a crucial role in shaping market sentiment. Large hedge funds and institutional investors have been adjusting their ETF positions, with some analysts predicting that continued accumulation by institutions could drive Bitcoin’s price higher in the long term.

3. Market Reactions to Global Events

Geopolitical tensions, government regulations, and trade policies continue to impact global financial markets. Recently, Canada responded to U.S. trade tariffs by imposing retaliatory tariffs, creating economic uncertainty. These global developments can indirectly affect Bitcoin, as investors look for alternative assets to hedge against economic instability.

Key Takeaways and Market Outlook

1. Bitcoin’s price has dropped below $85,000, triggering a shift in market sentiment.
2. Long-term Bitcoin holders have ended their massive distribution phase, reducing selling pressure.
3. Exchange inflows have declined, signaling lower immediate selling pressure on BTC.
4. Trading volume has surged by over 24%, indicating strong investor interest despite the price drop.
5. Macro factors such as U.S. inflation reports, institutional activity, and global trade policies continue to influence Bitcoin’s price movement.

What’s Next for Bitcoin?

As the market stabilizes, all eyes will be on key resistance levels to determine whether Bitcoin can regain upward momentum. If Bitcoin holds above its current support zone and demand increases, we could see a potential recovery towards the $90,000 range in the near term. However, if selling pressure resumes, Bitcoin might retest lower levels before finding a solid foundation for its next move.

For now, investors should keep a close watch on market trends, on-chain activity, and macroeconomic indicators to better understand Bitcoin’s potential direction in the coming weeks. 🚀