Key Takeaways
What’s Driving Bitcoin’s Recent Price Drop?
Increased selling pressure on Binance is the main driver, as evidenced by multiple bearish market indicators.
Is Bitcoin’s Bull Cycle Over?
No, on-chain and whale accumulation data suggest the broader bullish trend remains intact despite near-term weakness.
Since recovering to $116,000 days ago, Bitcoin [BTC] has fallen sharply, reaching a low of $110,000.
In fact, at the time of writing, Bitcoin was trading at $110,641, marking a decline of 1.76% in the past 24 hours. This dip extends a weekly bearish trend, which is down about 9.28%.
Amid the recent price drop, crypto investors are actively debating the cause of Bitcoin’s weakness, with CryptoQuant pointing to increased selling activity from Binance traders.
Binance is driving Bitcoin’s decline
According to CryptoQuantBitcoin’s recent decline was mainly caused by increased selling pressure on Binance. Three key market indicators point to Binance leading the current sell-off.
For starters, the Coinbase Premium remains relatively high even as the price of Bitcoin continues to decline.
Source: CryptoQuant
If this metric remains positive as the price falls, it implies that Binance’s selling pressure is greater than US investors’ buying interest.
Second, while Bitcoin’s funding rate has remained positive on all other exchanges, it has remained negative on Binance for four days in a row.
Source: CryptoQuant
This difference suggests that traders on Binance are aggressively positioning themselves for a near-term downward move.
Finally, Bitcoin’s Taker Buy Sell Ratio has fallen to its lowest level in over a year, due to aggressive selling. Investors in the derivatives market therefore usually close their positions.
Source: CryptoQuant
In fact, Futures Taker CVD has remained in the red over the past week, further cementing the sellers’ dominance in futures.
Cumulatively, these three market indicators suggest that the Bitcoin market’s current decline is primarily driven by Binance activity.
Source: CryptoQuant
Is the cycle over?
Despite bearish signals from Binance activity, bullish sentiment persists in other parts of the market.
According to CryptoQuantThis short-term weakness does not indicate the end of the current cycle. The fundamentals in the chain remain strong and the overall bullish structure is still intact.
For example, Checkonchain’s data shows that exchange activity on whales and mega whales has signaled clear bullish conviction as they continue to accumulate.
Source: Checkonchain
The Whale and Exchange Balance Change has fallen to a monthly low, reaching -100,000 BTC, indicating more outflows from the cohort.
At the same time, the Megawhales Exchange Balance Change has fallen to -31.9k BTC, further proving this market belief.
Source: Checkonchain
Furthermore, Bitcoin’s reserve risk ratio has fallen since October 6, data from Checkonchain shows. At the time of writing, this ratio was around 0.0094, indicating that long-term holders are not selling and have high conviction.
BTC is therefore undervalued relative to the holder’s belief; therefore, the decline has created an accumulation window for holders.
Finally, Bitcoin short-term holders (STHs) are holding out because they have no incentive to sell. As such, STH sell risk has fallen to 0.001%, indicating STHs are unwilling to sell at a loss.
Source: Checkonchain
Therefore, STHs are optimistic about the market and expect prices to recover after this short-term weakness is resolved.
What’s next for BTC
According to AMBCrypto, Bitcoin is facing intense bearish pressure on Binance, while bulls elsewhere have attempted to recapture the market.
These market conditions put Bitcoin at a decision point. So if the bears on Binance continue to dominate the market, BTC could risk a drop to $108,469.
However, if bulls, especially whales, manage to reverse course, BTC will first reclaim $112,702 and target $115,000.