Bitcoin fell below $87,000 on Sunday, January 25, after US President Donald Trump threatened a 100% tariff on Canada and a US government shutdown, and news emerged that a government shutdown was expected.
This decline led to a cascade of liquidations.
According to CoinGlass data, $677.1 million worth of crypto positions were liquidated in the last 24 hours. Of that, $606.2 million consisted of long positions.
Bitcoin is in the grip of the bears
In one message on Xanalyst Donkerfost highlighted the declining Open Interest behind Bitcoin [BTC]. This decline has continued since November, which did not support the emergence of a new trend.
Source: Darkfost on X
There was an increase in OI in the first week of January, but this was only a brief rebound.
If the Open Interest starts to rise, this could be an indication of a trend reversal towards bullish, but this is not the case yet. As things stand, the derivatives market has deleveraged as Bitcoin continued to trend lower.
The Taker Buy/Sell Ratio measures which side is dominant and how aggressive they are. As the ratio drops below 1, it reflects that bears make up the majority of takers (market orders) and are responsible for driving the price.
The measure’s seven-day moving average is below 1, except for the first week of January.
The risk figures in the chain deteriorated
Another analyst, Axel Adler Jr., agreed with these findings, stating that the previous week marked an “accelerated deterioration” for BTC. The Net UTXO Supply Ratio fell below 0.50 last week, in an “increased risk zone”.
The price fell from the fairly certain value of 0.452 on January 19 to 0.319 on January 25. Any jumps in between were not substantial within the broader downward momentum.
If real demand doesn’t materialize, the analyst warned, the likelihood of continued weakness and further lows remains high.
Traders and investors should remember that market sentiment was broader anxious and should navigate this week’s trading accordingly.
Final thoughts
- The threat of a government shutdown and tariffs on a US neighbor boosted the market in the late hours of Sunday, exacerbating bearish sentiment.
- The onchain metrics agreed that sellers were dominant, and any short-term price increase was part of the downward momentum over the past week.