5 Key Charts That Explain the Recent Bitcoin Price Drop

Short-term holders' sell-offs at break-even created resistance, contributing to Bitcoin's price drop. Bitcoin ETFs saw $195.65 million inflows

Bitcoin dropped to $58,053 on September 13th, down from $65,062 two days ago, as enthusiasm over potential Federal Reserve interest-rate cuts waned amid rising open interest and positive funding rates.

Rising open interest and positive funding rates increased speculation, adding to market instability.

In the past two days, Bitcoin dropped from $65,062 to $58,053, a decrease of 10.8%, as enthusiasm over potential Federal Reserve interest-rate cuts faded. Over the past three months, Bitcoin has fallen by 12% and is currently trading 20% below its peak of nearly $74,000 reached in March.

Five Key Charts on the Recent Price Drop

To help explain the dramatic shifts in cryptocurrency prices, Maartunn, a leading author at CryptoQuant, has analyzed the recent market movement and identified five key charts.

Short-Term Holders Create Resistance

Short-term holders, who bought Bitcoin at higher prices and are now experiencing losses, played a crucial role in the recent price drop. Earlier this month, Bitcoin’s sharp decline left these short-term holders with an average 17% loss.

As the price recovered to their average cost, they sold around break-even, creating resistance that contributed to the ongoing price struggles.

Rising Open Interest

The rise in Open Interest up 31% from $13.5 billion to $17.9 billion since August 5th indicates increased speculation in the Bitcoin futures market. However, positive Funding Rates suggest a premium on perpetual contracts, further adding to market instability.

Bitcoin ETFs Inflow In the Green

U.S. spot Bitcoin (BTC) exchange-traded funds (ETFs) are experiencing strong performance amid the price decline, with eight consecutive days of net inflows totaling $195.65 million.

Meanwhile, another led CryptoQuant’s author IT Tech noted that these inflows primarily came from large holders, adding additional strain to already unstable futures positions.

Surges in Long Liquidations

The recent price drop has led to a significant increase in liquidations. Ethereum long liquidations surged to $55 million, and Bitcoin long liquidations reached $90 million, marking the highest levels since early August.

This surge in liquidations has caused Open Interest to drop by $2.2 billion, as many traders were forced to exit their positions.

Market Stabilization

The recent market turmoil has left many traders in precarious positions. As a result, the market will need some time to stabilize. Monitoring on-chain data in the coming days will be crucial for understanding future price movements and market conditions.