Bitcoin fell to $40,280 on January 19, its lowest level since December 12, 2023, before recovering to $41,979 after four hours of sustained selling pressure that liquidated most long positions on major exchanges.
At the time of writing, Bitcoin was trading at $41,609 after failing to break the $42,000 mark. Meanwhile, long liquidations amounted to approximately $30 million and made up 85% of all liquidations during the period, based on CoinGlass facts.
Most major cryptocurrencies saw similar price movements and are in the red today. However, the recovery from a key support level signals resilience as investors continue to buy at that key price level.
With $40,000
Bitcoin has crossed the $40,000 threshold despite significant selling pressure over the past week after spot ETFs for the flagship cryptocurrency were approved on January 10, resulting in a ‘sell the news’ event.
The ETFs initially caused the price to rise to $49,000 before investors began taking profits on short-term positions, sending the price back down to mid-December levels.
Initial speculation blamed the downward pressure on Grayscale, which dumped tens of thousands of Bitcoins onto the market. However, data shows that the nine new ETFs – led by BlackRock and Fidelity – have bought more Bitcoin than GBTC has dumped.
Based on available data, Grayscale has sold approximately 60,000 Bitcoin since the ETF began trading, while the ‘Newborn Nine’ has purchased approximately 72,000 BTC over the same period. This means that the downward pressure is not related to the ETFs, as the newer issuers appear to be actively maintaining the $40,000 price line.
The nine newly issued spot Bitcoin ETFs are experiencing continued interest from investors. BlackRock and Fidelity’s ETF have already reached $1 billion in assets under management, which equates to over 25,000 BTC.
Whales making a profit
Julio Moreno, head of research at Crypto Quant said the selling comes mainly from short-term traders who have gotten into positions specifically based on the ETF endorsement to “buy the rumor” and Bitcoin whales taking profits after a year of gains.
Meanwhile, the dynamics between long-term and short-term Bitcoin investors are becoming increasingly clear, as evidenced by recent market activity, research from CryptoSlate shows.
Long-term holders – typically those who have held Bitcoin for more than 155 days, including whales – have been observed moving their assets to exchanges to make profits. This trend emerged around July 2023, when the value of Bitcoin saw a significant drop from $30,000 to $26,000.
Specifically, on January 17 and 18, these long-term investors transferred an estimated 25,000 BTC, worth approximately $1 billion, to exchanges, a move interpreted as cashing out their investments without incurring losses.
Conversely, short-term Bitcoin holders, those who hold their investments for less than 155 days, have shown a more erratic pattern. On January 18, they transferred a significant amount of Bitcoin, worth $2.4 billion, to exchanges at a loss.
This indicates a higher level of activity among these investors and lower profits. In particular, those who had hoped to capitalize on Bitcoin’s rise to $49,000 appear to have already taken their profits or are facing losses.