Bitcoin's Price Drop: A Deeper Analysis
Despite the recent sell-off, Bitcoin's maturity was evident as leverage broke but conviction remained strong. A significant 90% of the BTC supply stayed in profit, indicating limited panic or forced exits.
The sell-off resulted in $132 million in short liquidations due to excess leverage. However, long-term holders remained composed, maintaining BTC's base stability.
The latest sell-off did not resemble the panic-driven collapses seen in 2022's Luna or FTX crashes. Instead, the evidence suggests a leverage reset rather than a crisis of confidence.
- Glassnode's data revealed over 90% of Bitcoin's circulating supply remained in profit despite the decline.
- This divergence implies most realized losses came from overexposed traders and top buyers, rather than long-term holders.
The correction was structural rather than emotional.
In contrast, during the Luna and FTX collapses, the Percent Supply in Profit metric fell below 65%, marking panic-driven capitulation phases.
Author's summary: Bitcoin's price drop is not a crisis of confidence.