Hodlers trigger Bitcoin’s $92K drop

November 26, 2024

Reading time: 5 minutes

Bitcoin drops to $92K as long-term hodlers take profits

Key points:

  • Bitcoin’s price fell 5.6% in 24 hours, trading at $92,774 on November 26.

  • Onchain data reveals long-term hodlers triggered the sell-off, not institutional investors or ETFs. Spot ETFs absorbed 90% of the selling pressure, supporting Bitcoin’s ongoing rally.

News - Bitcoin has experienced a 5.6% price correction, dropping to $92,774 on November 26, 2024. Contrary to speculation, on-chain data indicates that the sell-off was driven by long-term holders (hodlers) rather than institutional investors or exchange-traded funds (ETFs).

Eric Balchunas, a senior ETF analyst at Bloomberg, highlighted this trend in a November 25 post, stating, “The call is coming from inside the house, it’s long-term hodlers.” This observation aligns with crypto analyst Kyle du Plessis, who noted that while hodlers sold 128,000 BTC, U.S. spot ETFs absorbed 90% of the selling pressure, showcasing strong institutional demand.

Market context - The price correction comes after Bitcoin reached $99,000 on November 22, marking its largest monthly candle in history. Despite the pullback, many analysts remain optimistic, predicting Bitcoin will breach the $100,000 milestone before the end of the month.

Kris Marszalek, CEO of Crypto.com, suggested that the correction might be necessary for the sustainability of Bitcoin’s rally. However, the market has yet to undergo significant deleveraging, with the estimated leverage ratio across cryptocurrency exchanges standing at 0.24—the highest since August 2023, per CryptoQuant data.

What it means for investors - The sell-off by long-term holders could signal profit-taking after the recent rally. However, the ability of ETFs to absorb most of the selling pressure indicates robust institutional interest, which may provide stability to Bitcoin’s ongoing bull run. Investors should remain cautious of leverage levels, as potential deleveraging could impact near-term price movements.

While Bitcoin’s price correction reflects activity among long-term holders, strong institutional demand and ETF absorption suggest the broader rally remains intact. As Bitcoin inches closer to $100,000, the market’s resilience will be tested by leverage dynamics and sustained buying interest.

Record outflows: Bitcoin ETFs drop $438M since election rally

Key points:

  • Spot Bitcoin ETFs saw $438.37 million in outflows on November 25, marking the steepest single-day drop since Trump’s election win.

  • Total assets under management for spot Bitcoin ETFs dropped by $5 billion, now standing at $102.23 billion.

  • Despite the dip, spot Bitcoin ETFs recorded a record $1 billion in daily inflows on November 21, contributing to a cumulative inflow of $30.4 billion this month.

News - U.S.-based spot Bitcoin ETFs faced their largest single-day outflows since the U.S. presidential election, with $438.37 million withdrawn on November 25, 2024, according to Sosovalue data. This sharp decline signals a potential shift in market sentiment, following a record $1 billion in daily net inflows just days earlier on November 21.

Total assets under management (AUM) for spot Bitcoin ETFs have decreased by $5 billion, now at $102.23 billion compared to $107.49 billion on November 22. Despite the pullback, ETFs continue to play a significant role in the crypto market, with institutional investors accounting for over 5% of Bitcoin’s market capitalization.

Shifting sentiment and price impact - The outflows come as Bitcoin’s price dipped to $92,000 on November 25, down from its recent high of $99,655 on November 22. The 7% drop is attributed to profit-taking following a strong rally sparked by Donald Trump’s re-election and optimism around pro-crypto policies.

Notably, spot Bitcoin ETFs set a new record for inflows during the week of November 18–22, with $3.38 billion in net inflows—a 102% increase from the prior week. BlackRock’s iShares Bitcoin Trust leads the pack, holding $47.03 billion in assets and accounting for a significant portion of the cumulative $30.4 billion in net inflows for November.

Navigating ETF volatility - The $438.37 million outflow highlights the volatility of Bitcoin ETFs as market sentiment shifts between optimism and caution. While inflows remain strong overall, the profit-taking seen in recent days reflects investor uncertainty amid the broader crypto market’s price fluctuations.

For long-term investors, the continued strength of institutional participation through ETFs may indicate resilience, even as short-term corrections occur.

The recent outflows from spot Bitcoin ETFs mark a stark contrast to the inflow records earlier in November, underscoring the dynamic nature of institutional and retail participation. As the crypto market adjusts to fluctuating sentiment, ETFs will continue to play a crucial role in Bitcoin’s liquidity and price stability.

ADA bulls withdraw $100M, eye $2 target

Key points:

  • Cardano holders pulled $100 million worth of ADA from exchanges in the last two days, signaling reduced selling pressure.

  • On-chain data reveals increased trading activity among dormant tokens, supporting bullish momentum. ADA’s price shows a bullish “flag” pattern, indicating a potential rally toward $2.

News - Cardano (ADA) bulls are signaling optimism as approximately $100 million worth of ADA has been withdrawn from exchanges in the past two days, according to Coinglass data. This trend reflects a decrease in selling pressure, often a precursor to upward price movements.

Currently trading at $0.98, ADA has experienced a slight dip from its recent high of $1.15, aligning with the broader market correction that saw Bitcoin drop below $95,000. However, Cardano’s outflows suggest investors are holding firm, with reduced exchange inflows hinting at a long-term bullish sentiment.

What on-chain metrics reveal - The 90-day Mean Dollar Invested Age (MDIA), a metric tracking the average age of tokens weighted by purchase price, shows a significant decline for ADA. This drop indicates increased trading activity among previously dormant coins, a sign of renewed market interest and potential upward momentum.

Additionally, the ADA Spot Inflow/Outflow metric stands at -$40 million, down from -$63 million on November 25, 2024. This trend highlights sustained withdrawal activity from exchanges, reducing the immediate likelihood of sell-offs and creating upward price pressure.

Technical analysis: Bullish flag pattern - ADA’s 4-hour chart reveals a bull flag pattern, a technical indicator characterized by two rallies separated by a brief consolidation period. This pattern suggests that ADA’s current price movement is consolidating before potentially breaking out toward higher levels.

If the price breaks above $1.15, ADA could rally toward the $2 mark. However, a failure to sustain buying pressure might result in a decline to $0.85.

Cardano’s $100 million outflows and bullish on-chain metrics suggest a potential recovery for ADA, with signs pointing toward a price rally to $2. While technical indicators favor a bullish outlook, traders should remain cautious of broader market dynamics that could influence short-term price movements.

Dogecoin futures open interest soars to $4.6B: Bullish signal or top?

Key points:

  • Dogecoin futures open interest reached an all-time high of $4.6 billion on November 23, doubling the previous record.

  • The surge in open interest coincides with DOGE’s 224% rally this month, sparking concerns about a potential cycle top. Leverage demand remains neutral, with no immediate signs of cascading liquidations.

News - Dogecoin (DOGE) futures open interest has soared to an unprecedented $4.6 billion, doubling its previous record. This milestone reflects a sharp increase in leverage demand as DOGE prices rallied 224% from November 3 to November 23, 2024. Despite trading 35% below its all-time high of $0.74 from May 2021, the memecoin’s recent performance has reignited market speculation.

Traders worry the current rally could mirror DOGE’s price action from earlier this year. In March, a similar surge in futures open interest led to overleveraged positions, resulting in forced liquidations and a subsequent 40% price correction.

Leverage dynamics and Elon Musk’s influence - The funding rate for DOGE perpetual contracts—a critical metric indicating leverage demand—remains within a neutral range of 0.5% to 2.1%. While the funding rate briefly spiked to 7.5% on November 23, it quickly normalized, suggesting the recent rally was driven more by spot market activity than excessive leverage.

Elon Musk’s association with Dogecoin continues to fuel its popularity. His involvement in Donald Trump’s D.O.G.E. initiative, co-led with Vivek Ramaswamy, has further amplified DOGE’s appeal. This government efficiency project, coupled with Musk’s frequent endorsements, keeps Dogecoin at the forefront of investor sentiment.

DOGE in context - While DOGE’s 161% rally by November 25 is impressive, it lags behind peers like Stellar, Cardano, and XRP. Analysts speculate that Dogecoin’s price movements could decouple from other cryptocurrencies due to its unique community-driven nature and Musk’s influence.

Despite the rise in futures open interest, the market shows no immediate risk of cascading liquidations as leverage demand remains balanced. This stability may allow Dogecoin to sustain its momentum, provided broader market conditions remain favorable.

Dogecoin’s record futures open interest and ongoing rally highlight its enduring appeal, fueled by both market dynamics and cultural significance. While concerns about overleveraged positions persist, neutral funding rates and strong spot market activity suggest the rally could continue. Investors should monitor leverage levels closely to gauge potential risks and opportunities.

Interesting facts

  • In 2021, a blockchain-based game called Axie Infinity became so popular in the Philippines that half of its daily users were from the country. Some players even earned more from the game than their day jobs, making it a nationwide phenomenon.

  • The infamous 2016 DAO Hack led to the theft of 3.6 million ETH, causing a major split in the Ethereum blockchain. The community chose to "hard fork" the chain, creating two versions: Ethereum (ETH) and Ethereum Classic (ETC).

  • Certain wallet addresses, nicknamed "black hole" addresses, are used to burn tokens forever. Once tokens are sent to these wallets, they’re gone for good, effectively reducing the total supply.

Top 3 coins of the day

Arbitrum (ARB)

Key points:

  • At press time, ARB was trading at $0.88.

  • It saw significant gains over the last 24 hours but was later down by about 2.28%, undergoing a slight correction.

What you should know:

ARB was seen continuing its bullish momentum on the daily chart after a strong rally in recent sessions. The price was trading above the 9-day Simple Moving Average (SMA) at $0.71, indicating a solid short-term uptrend. The SMA acted as dynamic support, keeping the momentum intact. Moreover, the Relative Strength Index (RSI) at 70.00 sat right at the overbought threshold. This indicated that ARB has been experiencing strong buying pressure but could face a short-term pullback or consolidation as traders take profits. Volume has increased significantly during the rally, confirming robust buying interest. However, the recent session has shown slightly lower volume alongside the red candlestick, suggesting potential profit-taking. Immediate resistance lies near $0.93, while the 9-day SMA at $0.71 serves as key support if the price retraces further.

Raydium (RAY)

Key points:

  • At press time, RAY was trading at $5.47.

  • It was down by about 2.41% over the last 24 hours and is among the top losers during this period.

What you should know:

The daily chart showed RAY retracing after reaching the upper Bollinger Band, signaling a potential reversal or consolidation phase. The price remained above the middle Bollinger Band (20-day SMA) at $5.40, which may act as immediate support. This indicated that despite the recent pullback, the broader trend remains bullish. The Chaikin Money Flow (CMF) at 0.07 reflected mild positive capital inflow. This suggested that while buyers have been present, their momentum has weakened slightly during the pullback. Volume has decreased in the last 24 hours compared to the recent rally, supporting the narrative of reduced buyer activity or profit-taking. Resistance is likely near the recent high of $6.00, while the middle Bollinger Band at $5.40 serves as key support. A breakdown below this level could open the door for a retest of the lower Bollinger Band near $4.34.

Ethereum (ETH)

Key points:

  • At press time, ETH was trading at $3,387.

  • It was down by about 0.81% in the last 24 hours but remains one of the top trending coins.

What you should know:

On the daily time frame, ETH consolidated near its recent highs after a strong rally. The Parabolic SAR dots remained below the price, indicating that the overall trend remains bullish. However, the consolidation suggested a potential slowdown in momentum as ETH approaches resistance. The Directional Movement Index (DMI) confirmed a strong trend, with the +DI (green) at 38.39 significantly higher than the -DI (red) at 9.40, and the ADX (yellow) at 30.73, indicating a robust and established bullish trend. However, traders should monitor for a possible slowdown if the ADX flattens or declines. Volume showed steady activity during the recent rally, reflecting strong buyer interest. The current consolidation phase, combined with moderate volume, suggests traders are pausing to evaluate the next direction. Immediate resistance is near $3,460, while support is around $3,100, aligning with the previous Parabolic SAR levels.

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