The crypto market is stuck in a feedback loop of volatility.
Not surprisingly, Bitcoin [BTC] price acts as the main driver of volatility. BTC price action has been extremely choppy lately, fueling rumors of another potential flash crash, especially since there are no clear signs of a bottom forming.
Recently, BTC fell from $89,000 to $87,000 and then dropped back to $91,000, all within the span of four hours.
Given this setup, BTC’s low bid-side liquidity makes sense, even though the price is still trading about 30% below its ATH.
Net losses return
Source: TradingView (BTC/USDT)
It is striking that the market reaction says it all.
Bitcoins Net realized profit/loss has turned red again, indicating that net foreign exchange flows are being driven by HODLers selling at a loss rather than at a profit. That’s a classic story about capitulation pressure creeping in again.
Meanwhile, ETF flows remain subdued, even among BTCs Coinbase Premium Index ticking green, reinforcing the market’s risk appetite. In short, Bitcoin’s price action is still too volatile, putting the $90,000 level at risk.
Bitcoin’s price run raises questions about whale movements
It’s been almost two months since the October crash rocked the market.
And yet, the Bitcoin price still hasn’t recovered six figures.
However, on the daily chartBitcoin has made three lower highs, each driving a short-term recovery: $80,000, $83,000 and $88,000 since mid-November.
In this environment, leveraged positions were hit the hardest. Analysts marked $171 million in longs and $71 million in shorts were liquidated within four hours, sparking rumors of possible market manipulation.
Source: Coinglass
The 24-hour chart makes it clear: almost $500 million has been liquidated.
Combine that with Bitcoin’s recent choppy price action (as AMBCrypto previously noted) and these liquidations ask the question of whether smart money is deliberately keeping BTC in the loop to decongest the market
Looking at BTCs Open interest (OI), the thesis is correct. It is down $30 billion from October’s peak of $94 billion. In this setup, the whale activity appears intentional, turning the current Bitcoin price run into a bear trap.
Final thoughts
- BTC’s net realized gain/loss has turned red again, indicating holders are selling at a loss.
- Liquidations raise the question of whether smart money is deliberately keeping BTC in the loop.