Key Points
- Bitcoin’s price hit an all-time high above $126,192, then retreated 4% amid profit-taking and unusual wallet activity.
- Large dormant Bitcoin wallet movements and $620M crypto liquidations have been observed.
Bitcoin’s price reached unprecedented levels above $126,192 on October 6. However, it fell back 4% to around $120,000 due to intense profit-taking activities the following day.
Data from the blockchain reveals that this pullback coincided with unusual activities from dormant wallets. Furthermore, derivatives indicators suggest potential early rebound prospects.
Profit-Taking Activities and Dormant Wallet Movements
As Bitcoin’s price corrected by 4% on Tuesday, J. Martin, a CryptoQuant analyst, highlighted on-chain data. This data showed long-term holders cashing in their profits at the peak.
Martin noticed that wallets that had been inactive for 3 to 5 years were moving 32,322 BTC, approximately valued at $3.9 billion. This was the largest single-day transfer from dormant wallets for the year so far.
An increase in long-term wallet activity can introduce short-term bearish pressure. This is due to the reintroduction of large volumes of long-held Bitcoin in a short period, which dilutes the circulating supply and intensifies sell-side pressure. Additionally, it can deter new entrants, who might delay their purchases to avoid the impact of active long-term holder sell-offs.
Rebound Prospects Amid Crypto Liquidations
Historically, large dormant movements occur near Bitcoin bull cycle tops. However, active demand among crypto ETFs and corporate treasury firms could absorb the dormant BTC supply during the correction phase.
Bitcoin’s 4% correction triggered widespread volatility across crypto markets, causing $620 million in total liquidations. The $454.87 million leveraged long positions closed accounted for 74% of the losses, while shorts saw $165.44 million wiped out.
Nevertheless, derivatives data suggests that bulls are starting to counteract the selling momentum. Over shorter timeframes, liquidation ratios show a narrowing gap between long and short positions.
At the time of this report, total liquidation within the past hour totaled $12.42M with $6.28M long and $6.15M in shorts, with bulls cutting the 74% loss incidence to 55%.
This decrease in long-liquidation dominance indicates that bulls are regaining balance, counteracting the downward price action with covering positions, as Bitcoin stabilizes around the $120,000 support zone.
On Tuesday, US JP Morgan Chase CEO Jamie Dimon also declared that a US government shutdown is unlikely to impact financial markets.
Blackrock’s record-setting ETF inflows and Strategy reaffirming long-term buying commitment following $3.9 billion Q3 profits could reignite investor confidence in Bitcoin’s price discovery. A rebound from $120,000 could spark a $130,000 breakout attempt as markets anticipate another US Fed rate cut decision.
