Bitcoin Drops 5% After Whale Sell-Off Following U.S. Regulation Boost

Bitcoin is currently experiencing selling pressure following its recent all-time high (ATH) of $122,838. This new peak came as the U.S. streamlined its regulations to facilitate the adoption of Bitcoin and other cryptocurrencies. The Bitcoin Whale Position Sentiment indicator showed a shift in market sentiment, with selling becoming increasingly dominant, reaching 0.75 at the time of reporting. This shift was further confirmed by the Cumulative Volume Delta (CVD), which indicated dominant selling, and the Open Interest, which declined.

The sell-side pressure was also evident in the Buy/Sell Pressure indicator, which showed a rising sell-side reading of 0.6, while buying was declining and heading towards the negative zone. The delta, which measures the difference between buying and selling pressure, was at about 5, down from a high of nearly 40 in the previous few days. This divergence in buying and selling activity is seen as a normal market correction after hitting new peaks, allowing institutions and other market participants to take profits.

However, the selling pressure has been exacerbated by the activities of dormant whales who accumulated Bitcoin during the Satoshi-era. According to data from Onchain Lens, a whale who moved 80,000 BTC a few weeks ago resurfaced and transferred 9,000 BTC worth about $1.06 billion to Galaxy Digital, marking their first cash-out. This activity suggests that over-the-counter (OTC) markets are being used as cash-out avenues due to their fast fiat flows and minimal slippage.

Looking ahead, the Aggregated Liquidation Levels Heatmap indicates potential support zones where the price of Bitcoin could react as the new ATH hype unfolds. As Bitcoin trades in a correction phase, two zones at $115,000 and $108,000 show potential support levels. If the price falls to these levels, buyers could step in and drive the price back up. These zones represent areas where traders are anticipating a potential reversal for trend continuation. Additionally, more liquidity is concentrated at the $143,000 to $146,000 price zone, suggesting that once Bitcoin rebounds, its next targets could be above the $140,000 price level.