Bitcoin Falls Below $86,000…Market 'Shaken' by Movement of Dormant Whales

Bitcoin (BTC) fell below the $86,000 level intraday on the 21st, widening its losses. Bitcoin is down about 7% from the previous day and has dropped more than 20% over the past month, experiencing a much larger correction than global equities.

The direct trigger for this decline was the U.S. Bureau of Labor Statistics (BLS) September employment report. Nonfarm payrolls increased by 119,000, more than double the market estimate (50,000). The market mood, which had been expecting rate cuts based on a cooling labor market, immediately turned to disappointment. The unemployment rate, however, rose to 4.4%, up 0.1% percentage point from the previous month, showing mixed signals.

Alongside these macro factors, on-chain selling pressure is also increasing. A market maker (MM) flow desk analyzed that "large volumes are moving from long-dormant Bitcoin wallets to centralized exchanges" and that "tens of thousands of bitcoins are waking from long periods of inactivity and a selling flow is pouring out."

It added, "With year-end approaching, investors focusing on protecting gains and not aggressively increasing positions is also exacerbating liquidity weakening," and "buying walls at major support levels are thinning."

The derivatives market is also reflecting the bearish trend. On Bitcoin and Ethereum (ETH), downside buying has increased and demand for put (downside) options has risen, with traders adjusting the strikes of existing put positions to lower price levels.

According to options exchange Deribit, the $85,000 put option has overtaken the $140,000 call option that had been leading the market, accounting for the largest open interest in the entire options market. This is interpreted as the market preparing for further downside risk.

In addition, increased selling by non-crypto investors using spot ETFs—particularly retail investors—was also cited as intensifying downward pressure.

JPMorgan said in a recent report that "the October correction was due to large-scale deleveraging by crypto-native investors in the perpetual futures market, but most of that leverage reduction was completed in November," and pointed out that "the current drivers widening the declines are retail investors who have been investing in Bitcoin and Ethereum via spot ETFs."

According to JPMorgan, about $4 billion has flowed out of Bitcoin and Ethereum spot ETFs since November, already surpassing the largest net outflow recorded in February this year. Weakening market demand and capital flight are combining to further intensify price pressure. On the day, U.S.-traded Bitcoin spot ETFs recorded a net outflow of $904,000,000, the second-largest single-day net outflow since launch.

Market attention is now focused on strategies. Bitcoin's price approaching the strategy's average purchase price of $74,430 could become another watershed for investor sentiment. JPMorgan analyzed that "concerns are expanding over the strategy's poor performance potentially leading to exclusion from MSCI indices," and that "a measure to be decided in January next year could trigger billions of dollars of capital outflows, which may act as an additional shock to an already fragile crypto market."