Who Is Responsible for the Recent Drop in Bitcoin’s Price?

Cryptocurrency analytics company CryptoQuant stated that the recent selling pressure on Bitcoin is largely due to short-term investors who have suffered losses.

The company’s latest analysis states that the price drop between May 16th and May 18th provided important signals about market psychology.

According to data shared by CryptoQuant, the “Bitcoin Short-Term Investors’ Total Profit and Loss (Exchange Data, Last 24 Hours)” metric measures whether short-term investors’ $BTC sent to exchanges are in profit or loss. This indicator allows tracking whether market sell-offs are due to profit taking or panic-driven sell-offs.

According to the analysis, the most striking factor in the recent decline was the significant imbalance between profitable and losing investors. In the last 24 hours, short-term investors who were in profit sent only about 112 $BTC to exchanges. In contrast, short-term investors who were losing money transferred approximately 15,000 $BTC to exchanges during the same period.

It was stated that total short-term investor inflows to the exchange were approximately 15,100 $BTC, almost all of which consisted of coins sold at a loss. Thus, profit-taking represented less than 1% of total inflows, and selling pressure largely came from investors who stopped selling.

CryptoQuant stated that the current situation constitutes a classic “weak hand cleanup,” meaning that weak hands are being eliminated from the market. The analysis indicated that with the price drop, investors who had recently bought lost confidence, losing positions were rapidly moved to exchanges, and the market absorbed this forced liquidity from the sell-off.

The company stated that the critical issue going forward is whether the approximately 15,000 $BTC inflow due to losses will decrease quickly. If this selling pressure falls rapidly, it could mean a short-term market reset, while if inflows continue to increase, it could indicate that impatient capital is still exiting the market.

*This is not investment advice.