Explainer – Why is Bitcoin under so much sell pressure right now?

As the world’s largest cryptocurrency, Bitcoin [BTC] often takes the lead whenever the market falls or climbs. However, the last 24 hours proved that assumption somewhat inaccurate.

In fact, while BTC gained by only 4% over this period, the broader market managed to hike by 7%. Some altcoins even managed to outperform Bitcoin with double-digit returns. The timing here is worth pointing out. Especially since these upticks came soon after a market crash that saw almost $1 trillion wiped out in over a week.

With that in mind, traders are becoming more cautious, as it seems everything that could go wrong for Bitcoin is going wrong.

Is there looming sell pressure ahead?

In that light, mega whale Garrett Bullish seems to be feeling the heat of a bearish crypto market. The whale lost about $250 million in the last five days after its liquidation.

Right now, Garrett Bullish appears to be aggressively securing his remaining assets. He deposited over 5,000 Bitcoin valued at $345 million into Binance. The deposits were made in bits, with the largest position worth about $238.72 million.

The move could be an attempt to sell to cut losses. Especially since the market seems to be weak, despite its slight recovery. With the whale now potentially geared up for a sale, more price damage may be incoming.

Liquidations meet social sentiment

On the metrics side of things, the Short-Term Holder P&L to Exchanges revealed that Bitcoin went through the largest liquidation event of the year. This, barely two months into the new year. During the same, more than 90k BTC was wiped out in only 24 hours.

This event coincided with the lowest level of Bitcoin’s social sentiment in over four years, thus accelerating the drop. This also made it hard for participants to bounce back and buy the dips.

According to analyst Ali Martinez’s observations, the social sentiment was at negative 6.90 while the price traded around $67,960. This might explain the market-wide fear in Bitcoin, crypto, and overall risk-on assets. However, this was the best time to be a contrarian from historical data.

As that was not enough, the technical outlook was also not attractive to investors and traders. But why was this so?

A loss of M2 correlation

Bitcoin recently lost its correlation to the global M2 money supply. Historically, the two have moved in the same direction. Capital inflows are directly proportional to price jumps, but only when there is BTC demand.

On the charts, M2 has been rising lately. On the contrary, the price of BTC has been falling. This decoupling could be a sign that the capital is not deployed to BTC. Instead, other risk assets like gold and silver might be becoming more viable options.

This observation also implied that the crypto’s price might fall even further. This would mean surpassing the 50% retracement from its ATH. That would bring the rebound to about a 60% retracement level.

Right now though, BTC’s price is under intense sell pressure from the aforementioned conditions. That is why Bitcoin and the entire crypto market are under bearish control until capital deployment changes direction.

Final Thoughts

• Garrett Bullish deposited about $345M BTC into Binance – A sign of looming sell pressure. 
• Bitcoin recorded the most liquidations, the lowest social sentiment, and decoupling from the global M2 money supply just this week.