The latest on-chain data reveals the reasons behind Bitcoin’s (BTC) price drop to around $108,000.
According to analyst Arab Chain on CryptoQuant, it wasn’t due to a wave of selling from large investors, but rather to quick profit-taking by short-term traders throughout August.
Bitcoin selling pressure was driven by short-term action
Every time the price approached a resistance level, Bitcoin selling volume from short-term speculators increased sharply. This pressure wasn’t enough to reverse the main trend, but it did prevent the price from breaking through $120,000.
On the other hand, long-term investors remained resilient and held their holdings. This indicates that confidence in the long-term trend remains solid, despite the market’s initial volatility.
Arab Chain explained that the short-term sell ratio did increase slightly last month, but remained within normal limits. Meanwhile, the long-term sell ratio appeared weak and stable, making panic selling unlikely.
In other words, this correction was driven more by traders seeking to lock in profits when the price briefly reached a new record, rather than by large holders exiting the market.
Furthermore, psychological factors also exacerbated the situation. The failure to break through $124,000 frustrated many short-term traders, who rushed to liquidate their positions. Fear of missing out on profits actually accelerated the selling trend.
However, the absence of large-scale selling by long-term holders signals that the broader trend has not reversed.
Derivatives record surge in activity
Another indicator comes from derivatives data on CoinGlass. Bitcoin trading volume surged 56.48% to $93.19 billion, indicating increased speculative activity.
Open interest also rose 1.33% to $81.75 billion, indicating that open positions are still growing.
Furthermore, the Bitcoin options market also witnessed a surge, with volume surging $56.82 to $5.25 billion, while options open interest rose $2.49 to $47.77 billion. These figures demonstrate that despite falling spot prices, excitement in the derivatives market is actually growing.
In conclusion, Bitcoin’s correction towards $108,000 is more like a “short breath” caused by short-term speculators rushing to secure profits. Long-term holders are not being provoked, and derivatives data actually suggests increased market activity.
Therefore, rather than a major warning sign, this condition can be interpreted as a healthy correction phase emerging amid a long-term uptrend.