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Bitcoin experienced a notable 1.8% decline following a massive $3.7 billion transfer of BTC to exchanges by Galaxy Digital and other major holders, sparking intense selling pressure and liquidations.
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Short-term holders led the sell-off, moving over 26,000 BTC to exchanges and selling at a loss, which significantly increased market volatility and trading volume.
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According to CryptoQuant analyst Maartunn, this surge in selling has driven Bitcoin’s open interest up by $3.8 billion, while BRN Lead Research Analyst Valentin Fournier highlighted that $531 million in options positions were liquidated, resetting overleveraged longs.
Bitcoin drops 1.8% amid $3.7B BTC transfers to exchanges by Galaxy Digital and others, triggering heavy selling, liquidations, and a spike in trading volume and open interest.
Galaxy Digital’s $3.7 Billion BTC Transfer Sparks Market Volatility
Early Friday morning, Galaxy Digital, alongside other large Bitcoin holders, moved a staggering $3.7 billion worth of BTC to exchanges, intensifying selling pressure across the market. While Galaxy Digital primarily manages assets on behalf of clients, this transfer contributed to a significant influx of Bitcoin on exchanges, which often precedes heightened sell-offs. CryptoQuant analyst Maartunn reported that 35,568 BTC were transferred to exchanges within 10 hours, with 26,100 BTC moved by short-term holders who sold at a loss. This activity underscores the influence of short-term traders in amplifying market fluctuations during periods of increased liquidity.
Short-Term Holders Drive Sell-Off Amid Rising Open Interest
The sell-off was predominantly led by short-term holders (STHs), who offloaded a large portion of their Bitcoin holdings at a loss, exacerbating downward price pressure. Maartunn emphasized that this trend has caused Bitcoin’s open interest to surge by $3.8 billion, indicating increased leveraged trading activity. This rise in open interest often signals heightened market risk but can also precede sharp price movements. Despite the selling pressure, Bitcoin’s price demonstrated resilience, rebounding slightly from an early low of $115,000 to $116,365 at the time of reporting.
Liquidations and Market Sentiment: A Closer Look
BRN Lead Research Analyst Valentin Fournier noted that over $531 million worth of options positions were liquidated within the past 24 hours, with $376 million attributed to long positions. This liquidation event has effectively reset overleveraged traders, potentially stabilizing the market by reducing excessive speculative bets. Fournier also pointed out that short open interest now exceeds $2.8 billion, setting the stage for a possible short squeeze should Bitcoin regain upward momentum. Despite these developments, the Crypto Fear & Greed Index remains relatively high at 70, reflecting sustained investor confidence and a lack of widespread fear in the market.
Institutional Activity and Trading Volume Trends
Institutional investors have shown mixed signals this week. While Bitcoin ETFs recorded net deposits of $226 million on Thursday, offsetting earlier withdrawals totaling $285 million from Monday to Wednesday, the overall trend for the week remains slightly negative. Trading volume surged by 37% in the last 24 hours, with $131.6 billion worth of Bitcoin changing hands, according to Coinglass data. This elevated activity highlights the market’s responsiveness to large-scale BTC movements and the ongoing tug-of-war between buyers and sellers.
Conclusion
The recent $3.7 billion BTC transfer by Galaxy Digital and other holders has catalyzed significant market activity, driving a 1.8% price drop and triggering extensive liquidations. While short-term holders have intensified selling pressure, the market shows signs of stabilization through liquidations and institutional inflows. With open interest elevated and a potential short squeeze looming, traders should monitor these dynamics closely as Bitcoin navigates this period of volatility. Maintaining awareness of these key indicators will be crucial for investors seeking to understand Bitcoin’s near-term trajectory.
