Bitcoin has retracted to the $85,000 mark, a crucial support area that bulls need to protect to avoid a significant downturn. Following its inability to regain higher prices, the price movement has slowed, leading to a reduction in volatility and underscoring a market atmosphere plagued by indifference and trepidation.
Related Reading
Overall sentiment in the cryptocurrency realm has sharply declined, with an increasing number of analysts speculating about the potential for an extended bear market that could last into the following year. In this scenario, identifying who is actually selling is increasingly vital compared to the price fluctuations themselves.
As per a recent report from CryptoQuant report, Bitcoin’s downturn from the ~$88.2K level to around ~$85K showcases a clear on-chain interpretation of market dynamics below the surface. Data on exchange inflow categorized by Short-Term Holders (STH) and Long-Term Holders (LTH) indicates that the downturn was not instigated by selling from long-term investors.
Historically, bear markets quicken when long-term holders start liquidating their assets. The absence of such activity implies that the current decline reflects adjustments in positioning and risk management rather than a collapse in long-term belief. As Bitcoin tests the $85K mark, the market is also assessing price support levels.
Short-Term Profit-Taking, Not Structural Distribution
The CryptoQuant report by Crazzyblockk offers an exact analysis of who caused Bitcoin’s recent decline. On December 15, when BTC was trading close to the $88.2K level, Short-Term Holders moved around 24.7K BTC to exchanges.
Significantly, 86.8% of this supply was booked as profit, with only 13.2% sold at a loss. In dollar terms, the profitable STH inflows surpassed $1.89 billion, significantly overshadowing selling driven by losses. This pattern clearly indicates that sellers were mainly recent buyers cashing out on gains, rather than distressed participants capitulating under pressure.
As the price dipped on December 16 towards the $86K region, total STH inflows plummeted to just 3.9K BTC. Although this smaller volume was recorded at a loss, its limited scale indicates exhaustion rather than an increase in selling pressure. While the proportion of loss realizations grew, the absolute volume did not—a key aspect often missed in shallow market analysis.
Long-Term Holder behavior supports this positive interpretation. Across both days, LTH inflows remained low, decreasing from about 326 BTC to just 50 BTC. There are no signs of capitulation or significant distribution from this group. Overall, the data illustrates a market cooling primarily through short-term profit-taking rather than a breach of structural selling pressure.
Related Reading
Bitcoin Weekly Price Structure and Key Support Dynamics
Bitcoin has sharply pulled back from its cycle peaks and is currently consolidating within the $85K–$88K zone. This range holds technical significance. The price is now interacting with the rising 100-week moving average, which has served as dynamic support throughout the broader uptrend since 2023. Up to now, buyers are striving to safeguard this level, averting a deeper weekly close below it.
Structurally, the market has transitioned from a phase of strong impulsive expansion to a corrective phase. Losing the 50-week moving average earlier in the retracement indicated a shift from momentum-led price discovery to consolidation and mean reversion. However, the long-term trend remains valid as long as Bitcoin stays above the 200-week moving average, which is currently significantly below the market price.
Related Reading
Volume has diminished during the pullback, suggesting that selling pressure is not intensifying dramatically. This observation supports the notion that the price movement is corrective rather than indicative of market distribution. From a risk management perspective, failing to hold the $85K level could lead to a deeper retracement into the low-$70K range.
On the other hand, reclaiming the $90K–$92K zone would be necessary to restore bullish momentum and structure on a weekly basis.
Featured image from ChatGPT, chart from TradingView.com
