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In the early hours of Thursday morning, the price of Bitcoin suddenly fell below $90,000, causing long positions worth more than $100 million to be liquidated in just one hour.
At the time of preparation for this news, the currency was trading at $90,000, down around 2.3% in the past 24 hours, according to data from “CoinGecko”.
The drop in Bitcoin prices comes amid signs of significant withdrawals from liquidity in Bitcoin-related investment products.
Bitcoin exchange-traded funds recorded net redemptions of $486 million on Wednesday, the largest single-day exit since November 20, data from Farside Investors showed.
Following a strong start to the year, approximately $243 million in liquidity was withdrawn on Tuesday, with flows also turning negative on Tuesday.
Bitcoin’s price action appears to be closely tied to the performance of ETFs in recent days, although debate continues over the real factors that led to its rise to $94,000.
While institutional demand is cited as one of the most prominent potential drivers, some analysts believe that any geopolitical changes related to Venezuela could cause oil prices to fall, thereby lowering inflation and mining costs and providing a more supportive environment for Bitcoin.
Commenting on recent trends, CryptoQuant analysts said that on-chain demand has yet to show a clear recovery, and current activity levels are still not enough to support an upward wave towards $100,000.
He explained that overall sentiment remains mixed, while transaction volumes remain low, suggesting a return to strong activity on the network has yet to show signs of continued improvement.
He added that the situation may improve as the holiday season ends as many investors tend to reduce trading activity, which may be reflected in liquidity levels and market movements.
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