On Monday, the cryptocurrency market witnessed a significant reshuffle as short-term Bitcoin (BTC) holders began exiting at a loss. This sudden pivot came as BTC prices tumbled, prompting derivative traders to pull back and resulting in a notable decrease in open futures positions on the Chicago Mercantile Exchange (CME).
As defined by Glassnode, short-term holders—those who have maintained their holdings for less than 155 days—transferred over 21,000 BTC, valued at approximately $2.2 billion, to exchanges amidst a price drop that saw Bitcoin plummet by as much as 4.7%. This decline marks the largest seen in a fortnight, according to CoinDesk Indexes pricing.
This large transfer was the second-highest recorded within the month, suggesting that many new entrants, particularly those who acquired Bitcoin at peaks around $108,000 early in the year, may have become jittery following the sudden retreat into the five-digit price range.
The addresses involved in this activity are typically controlled by active traders and newcomers, who often react sensitively to price volatility. As BTC dipped below $98,000, factors such as the release of Chinese startup DeepSeek—potentially signaling a shift in U.S. technological dominance—added to the market’s pressure.
Capitulation signs were not limited to short-term holders. The broader market exhibited trends often linked with price bottoms. For instance, the perpetual funding rates for BTC turned negative, indicating stronger bearish sentiments among traders. Such flips have historically occurred during local lows, similar to events on January 13 and August 5, when Bitcoin prices dipped beneath key thresholds.
The retreat of institutional investors is also reflected in the Chicago Mercantile Exchange, which displayed the largest notional decrease in open interest, coinciding with a significant drop in chipmaker Nvidia (NVDA). Bitcoin’s notional open interest plummeted by a historic $2.4 billion (approximately 17,000 BTC), resulting in a lower basis, as recorded by Glassnode.
Furthermore, Bitcoin exchange-traded funds (ETFs) listed in the U.S. experienced a staggering outflow of $457.6 million. This aligns with similar trends observed on January 13, suggesting a prevailing cautious sentiment among investors.
