The Real Reason for the Drop in Bitcoin Price Has Been Determined

The sudden retreat in Bitcoin (BTC) prices starting from the $126,000 level has raised various questions among investors. This sharp decline, which occurred last week, has brought the dynamics of the cryptocurrency market back into focus. CryptoQuant analysts have thoroughly analyzed the fundamental factors behind the falling prices.

According to the analyses, the most prominent reason for the drop in Bitcoin was the selling at a loss by short-term investors. The STH SOPR data falling below 1 indicates that these investors actively sought to cut losses and close their positions. Additionally, the increase in the trading volume of coins younger than three months confirmed that the selling pressure was largely driven by short-term investors.

On the side of long-term investors (LTH), although an increasing selling trend has been observed since September, CryptoQuant analysts believe that these sales should be considered a natural profit realization seen during the mid-cycles of bull markets. In other words, while LTH sales supported the trend, they were not the primary force driving prices down.

Moreover, the liquidation of leveraged positions increased downward pressure on the market. Especially during downturns, the liquidations of leveraged short-term investors led to a rapid decline in prices. The forced selling by these investors due to margin calls created downward momentum in the market.

Another striking data point was the continued rise of the Realized Cap. Despite falling prices, new short-term investor entries have been observed to persist; however, these entries were insufficient to counterbalance the pressure from the capitulation of older short-term investors and sales by long-term investors. Consequently, CryptoQuant analysts emphasized that the sharp decline from the $126,000 level in Bitcoin should not be seen as a cycle peak signal, but rather as a healthy correction within the bull market.