Giant whales awaken! Sleeping wallets dump assets en masse, revealing the truth behind Bitcoin's rapid decline

On Friday during Asian trading hours, a pressure signal emerged—Bitcoin once again fell below a key support level, dropping below $85,000, hitting a new 7-month low. This decline was not sudden; behind it, multiple complex market forces are colliding fiercely.

On-Chain Signals Reveal the Truth Behind the Sell-Off

A recent report from market maker FlowDesk pointed out the most direct culprit: Tens of thousands of Bitcoin wallets that have been “dormant” for years suddenly woke up, transferring large amounts to centralized exchanges. What are these old wallet holders thinking? No one knows, but the market is clear—they are selling.

How fierce is this selling pressure? Just look at the spot market: buying interest was instantly overwhelmed, with trading direction clearly favoring sellers. Meanwhile, fund managers are also shifting strategies, moving toward more conservative positions before year-end, preferring to lock in gains rather than add to their holdings. The result? Liquidity at key support levels is rapidly shrinking, and prices can be knocked down with a single spike.

Market Sentiment Turns from Optimistic to Panic

Looking back over the past month, Bitcoin has fallen more than 20%, far exceeding the performance of the stock market—this alone indicates how aggressive the shift in market sentiment has been.

Since breaking the all-time high of $126,000 in early October, Bitcoin has plummeted over 31%. Even more startling, it has dropped 17% in just the last 9 days, with the decline accelerating further. What caused the market to fall so rapidly from its peak?

Reversal of interest rate expectations. Initially, the market was optimistic about a rate cut in December, but now expectations have completely reversed. According to the latest data from CME FedWatch, the probability of a rate cut in December has been cut in half to 37.6%, with over 62% expecting rates to remain unchanged. In just one week, this expectation flipped—last week was a 50/50 chance, now it’s a 60/40 bearish outlook.

The predictive market Polymarket also confirms this story: 63% of traders expect no rate cut in December, with sentiment shifting starting Tuesday evening.

Defensive Positioning in the Derivatives Market

Options traders’ choices indirectly reflect the changing market mentality.

The most active $140,000 call options have faded from the mainstream, replaced by $85,000 put options—these now represent the largest open interest strike in the entire BTC options market. This indicates traders are re-positioning, preparing for a larger decline.

Data from Deribit shows large BTC and ETH trades mainly in a bearish direction, with traders continuously reducing their put option positions to maintain protection. The volatility curve also heavily favors puts—these are all signals of defense rather than offense.

Countdown in the Predictive Market

According to data from Myriad, sentiment has clearly shifted bearish. The probability that BTC will hit $85,000 first has risen to 80%, far higher than the chance of reaching $115,000. This means the probability of a decline to $85,000 has increased by 34% over the past week, with only 2.4% downside remaining to reach that level.

In contrast, bulls betting on $115,000 could see over 4x returns—yet the probability of this scenario is only 22%. Even if spot holders are correct, they would only gain about 31% if the price hits $115,000. The market’s risk-reward ratio has already tilted significantly toward the downside.

Liquidation Wave Highlights Market Fragility

In the past hour, liquidation volume in the crypto market surged. According to CoinGlass data, total market liquidations in the past 24 hours reached $933 million, with Bitcoin liquidations around $380 million and Ethereum about $239 million.

Ethereum (ETH) experienced a more severe decline, dropping about 3% today, hovering around $2,850, with a weekly decline of 15%. XRP fell nearly 3%, with a weekly drop close to 18%. These chain reactions all point to a common signal: the market is deleveraging.

Macro Background: Mixed Data

The US government’s delayed September employment report, released Thursday after reopening, showed an increase of 119,000 jobs for the month, better than expected, but analysts find the report somewhat ambiguous.

Heather Long, Chief Economist at Navy Federal Credit Union, described the report as a “complex mix”: on one hand, more people entered the labor force (+470,000); on the other, unemployment increased (+219,000). The result? “The Fed is highly unlikely to cut rates in December.”

This outlook aligns with market expectations, further reinforcing anxiety over a potential rate hike pause.

Technical Perspective: Oversold Doesn’t Mean Rebound

Bitcoin’s technical analysis shows the 14-day RSI has entered the “oversold” zone, but this does not necessarily mean a short-term rebound is imminent. Key support is at the 78.6% Fibonacci retracement level (around $86,000); if this level is broken, the next significant support is near the one-year low of about $74,000.

In the current structure, traders are still selling on rebounds until Bitcoin breaks out of the downtrend channel. Even if it does, the market may still need to see a higher “low” before bulls start to position more aggressively.

Hidden Systemic Risks

The market is also quietly worried about another issue: MicroStrategy (MSTR) might be removed from the MSCI index in January. JPMorgan recently warned that if this happens, it could trigger billions of dollars in passive fund outflows, adding further pressure to an already fragile crypto market.

Contrarian Thinking: The Power of an Unexpected Rate Cut

Interestingly, the market has almost fully priced in “no rate cut in December.” But if an unexpected move occurs—such as the Fed suddenly announcing a rate cut—this near-consensus expectation could trigger a sharp reverse squeeze, causing Myriad markets to rapidly reshuffle, and BTC could see a strong rebound. The probability of this scenario is currently severely underestimated.

Overall, Bitcoin’s decline is not caused by a single factor but results from multiple forces working together: old wallet sell-offs, reversal of rate expectations, ambiguous macro data, derivatives market shifts, and emerging systemic risks. The market is undergoing a “confidence crisis” test.