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Key Takeaways
What has happened after the liquidations on Monday?
After a $1.7 billion liquidation across crypto on the 22nd of September, the Open Interest dropped, and spot BTC ETFs and Binance stablecoins noted outflows.
What were the clues that the selling was not capitulation, but measured?
The long-term holder selling was steady in recent weeks and not just driven by this week’s drop, showing a market correction rather than capitulation.
On the 24th of September, Binance recorded its first major outflow of stablecoins in three months. In a single day, $913 million flowed out, observed analyst Amr Taha in a post on CryptoQuant Insights.
BTC spot exchange-traded funds (ETF) flows were negative, with a $253 million outflow on the 25th of September. What is the overall effect on Bitcoin [BTC] and the rest of the market?
This reduced the spot-buying liquidity on the platform and also signaled weakened buying power on Binance. The trend had been positive for stablecoin flows in recent weeks, so a break in this trend pointed to big players shifting their positions.
The Binance net taker volume increased to +$364 million. This signaled a rise in retail participation. However, the Open Interest (OI) on the exchange fell by nearly $500 million.
CoinGlass data showed a $3.35 billion drop in OI across exchanges on Friday, the 26th of September.
Are Bitcoin holders in panic now?
Yet, surprisingly, the estimated leverage ratio for Bitcoin hardly saw a dent. This meant that the drop in OI was driven primarily by liquidations and was not a market-wide de-risking event.
It was the first clue that Bitcoin holders were not capitulating.
The long-term holder (LTH) Spent Output Profit Ratio (SOPR) has slowly been declining since the first week of July. Crucially, the ratio was still at 1.57, well above the 1 value that signals holders in profit.
The sustained dip was accelerated by the recent price drop, showing investors were selling.
However, it has not made new lows compared to recent months, showing the market was likely not in capitulation mode.
Additionally, the Coinbase Premium remained green, even though it saw a dip in recent days. This was another sign that, though ETF flows were negative to reflect bearish investor sentiment, sell-offs from U.S.-based investors were not extreme.
Since the 22nd of September, Bitcoin has declined by 5.16%, continuing its downward trend. A deeper correction toward the $105,000–$107,000 range now appears likely.
The drop in OI reflects a reduced appetite for risk among speculators, reinforcing the current bearish sentiment. However, the broader market trend remains bullish, and such corrections are a natural part of healthy price action.
Traders and investors must not lose sight of the forest for the trees.
