Bitcoin Drops 5% to $116,850 as Whales Take Profits

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.

The recent price drop can be attributed to increased whale activity on Binance and profit-taking by long-term holders. According to a recent analysis by CryptoQuant, the Binance Whale Activity Score has seen a sharp rise following Bitcoin’s all-time highs of $122,000. This score tracks the behavior of large Bitcoin holders on Binance, with a high score indicating that whales are driving a substantial portion of activity on the exchange. 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 large-scale investors are either securing gains after the historic run to $122,000 or utilizing Binance’s deep liquidity to hedge or open new positions amid peak volatility.

André Dragosch, European Head of Research at Bitwise, observed a significant spike in long-term holder realized profits, explaining the ongoing correction. This magnitude of profit-taking, coupled with 98% supply in profit, is often a precursor to significant price corrections. The recent rally created a CME futures gap between $114,380 and $115,630. Futures gaps 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 predicted 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 keep the trend upward and the bull market intact.