The cryptocurrency market has just witnessed a major shock as Bitcoin (BTC) fell below 112,000 USD, marking the weakest weekly closing in many weeks. Notably, this sudden drop occurred just after Jerome Powell - Chairman of the Federal Reserve - indicated the possibility of interest rate cuts at the Jackson Hole conference, which was hoped to support the prices of risk assets. So why didn't Bitcoin rise but instead plummeted?

1. Whale cash flow and the shift to Ethereum

On-chain data shows that 'whales' - investors holding large amounts of BTC - have begun to convert their assets. A 'dormant' wallet for 5 years, containing nearly 24,000 BTC, suddenly became active and transferred more than half of the coins in one day. At the same time, another large wallet also transferred nearly 18,000 BTC to Ethereum.

Selling BTC to switch to ETH creates significant selling pressure in the Bitcoin market, making the buying power insufficient to absorb the sudden supply.

2. Weekend liquidity trap

The timing of the sell-off also contributed to the decline. Selling on weekends, when liquidity is lower than on regular days, means that a single large sell order can significantly pull the price down. As BTC price began to fall, stop-loss orders were continuously triggered, turning the initial decline into a chain reaction of sell-offs.

3. Signs of concern from exchange reserves

Blockchain analysis companies note that the amount of BTC flowing into exchanges increased sharply just before the price decline. This is a classic sign of increasing selling pressure, as a large amount of BTC on exchanges means a high probability of being sold into the market. More concerning, the trend of increasing weekend reserves seems to have become a significant weakness, paving the way for a sudden decline.

4. Pressure from miners and profit-taking activity

Not only whales, Bitcoin miners are also participating in the sell-off. With BTC price having once touched 114,000 USD before declining, many miners seized the opportunity to lock in profits, pushing a large amount onto the exchange. When the supply pressure from whales and miners converged, the market was overwhelmed at the most sensitive moment.

Conclusion

Instead of breaking out due to expectations of Fed easing, Bitcoin faced selling pressure from whales, thin weekend liquidity, large amounts of money flowing into exchanges, and profit-taking activities by miners. In the short term, investors should closely monitor key support areas and observe movements from large wallets - as the end or continuation of this correction will largely depend on whether whales continue to liquidate.

Register for a Binance account to receive permanent trading fee rebates:

- Link to register a new account: https://accounts.binance.com/register?ref=Q2FSX523

- Referral code: Q2FSX523