Bitcoin Plummets 18% as Demand Drops 200K BTC, Traders Misjudge Sentiment

Bitcoin's recent price movements have been influenced by a combination of weak demand, misaligned trader sentiment, and significant selling by large holders. The cryptocurrency's apparent demand, measured by the 30-day sum of daily block subsidies minus one-year inactive supply changes, has signaled bearish pressure. Between December 2, 2024, and March 10, 2025, demand peaked at 105k BTC on December 16, 2024, with the price at $97.5k. However, by March 3, 2025, demand had plummeted to -100k BTC as the cryptocurrency dropped to $80k. The 30-day Simple Moving Average (SMA) of demand also declined from 105k BTC to 77.5k BTC, reinforcing this downtrend.

A shift from positive demand to negative demand occurred after mid-January 2025, with sustained negative demand taking hold by February 17, 2025. This shift suggested that new supply outpaced the retention of inactive BTC, leading to downward pressure on the price. If demand remains negative, Bitcoin could test $75k, potentially declining to $70k. A reversal above 0 might stabilize the crypto at $85k, though sustained buying pressure would be needed to confirm a recovery.

Leveraged traders have misjudged Bitcoin’s price movement, as sentiment shifts failed to align with the price action. From February 2 to March 9, Bitcoin traded at $95k while top trader sentiment registered -2.8 – a sign of extreme bearishness. By February 16, sentiment flipped to 2.8 as the price fell to $85k, indicating that traders were going long despite the downtrend. This persistent misjudgment is a sign of overconfidence in a rally that did not materialize. If traders continue this pattern, further liquidations could push BTC to $78k. However, a realignment of sentiment with price trends could support a recovery, though market behavior remains unpredictable.

Large Bitcoin holders have accelerated selling, reinforcing bearish market conditions. Over the last three months, wallets holding 100–1,000 BTC reduced their holdings by 50,625 BTC, decreasing their market share from 23.48% to 22.94%. Similarly, wallets with 10–100 BTC shed 7,062 BTC, bringing their share down from 21.84% to 21.71%. This selling trend coincided with Bitcoin’s price decline from $97k to $84k between January 21 and March 2. The selling pressure intensified as the crypto neared $80k on February 22 – a sign that major stakeholders lacked confidence in the price sustaining higher levels. If this trend persists, Bitcoin could test $75k. However, if large holders begin accumulating again, BTC might rebound to $88k.

Bitcoin’s outlook remains uncertain, with weak demand, misaligned trader sentiment, and large stakeholder selling shaping its trajectory. Demand dropped to -100K BTC on March 3, reflecting market weakness. Leveraged traders consistently miscalculated trends, with sentiment shifts failing to align with price movements. Meanwhile, stakeholders offloaded 57,687 BTC, increasing downward pressure. If these trends persist, Bitcoin may decline further to $75k. However, a shift in demand or improving trader sentiment could trigger a recovery to $90k.