Bitcoin Drops 5% to $116,850 as Whale Activity Surges

Bitcoin (BTC) experienced a significant price drop, falling 5% to $116,850 on Tuesday, after reaching new all-time highs at the start of the week. The rejection occurred at $120,000, marking the highest daily-candle close ever and a crucial level for traders. On the four-hour chart, BTC is currently trading below the 20-period simple moving average (SMA), indicating potential further downside if it closes below this key indicator.

According to a recent analysis by CryptoQuant, increased whale activity on Binance and profit-taking by long-term holders may contribute to heightened market volatility. The Binance Whale Activity Score, which tracks the behavior of large Bitcoin holders, has seen a sharp rise following Bitcoin’s all-time highs of $122,000. Data shows that whales deposited approximately 1,800 BTC onto Binance on Monday, with transactions over $1 million accounting for more than 35% of the total Bitcoin inflows to the exchange. This suggests that major players are either securing gains or utilizing Binance’s deep liquidity to hedge or open new positions amid peak volatility, increasing the risk of sharp price swings.

André Dragosch, European Head of Research at Bitwise, observed a significant spike in long-term holder realized profits, which often precedes significant price corrections. The magnitude of profit-taking, coupled with 98% supply in profit, indicates a potential for a deeper correction. According to the analyst's forecast, Bitcoin’s recent rally created a CME futures gap between $114,380 and $115,630. Futures gaps tend to get “filled” most of the time, and traders approach these levels from the point of resistance or support, depending on the market structure. If history is a guide, BTC price should eventually drop to fill the CME gap down to $114,400. Crypto analyst Mikybull Crypto suggested that Bitcoin will “probably fill up the CME gap during the CPI release and continue the rally up.” However, MN Capital founder Michael van de Pope pointed out the possibility of a deeper correction toward $108,000, stating that staying above $108K would maintain the upward trend and confirm the bull market.