• Bitcoin’s surge to $126K reversed amid a $19B futures wipeout and global trade tensions.
• Long-term holders continued profit-taking, adding pressure on price recovery.
• ETF inflows slowed, signaling weakening demand and investor hesitation.

Bitcoin’s powerful rally, which briefly took the price to a record $126.1K, has quickly unraveled. The reversal came as traders faced a historic $19 billion futures liquidation, forcing a system-wide leverage reset.

Glassnode data revealed that Bitcoin failed to sustain its climb above the $114K–$117K supply zone, leading to intensified sell pressure triggered by rising U.S.–China tariff concerns.

The correction dragged prices back into the $108K–$117K band, a zone that often signals vulnerability in extended rallies. The current phase marks the third time since August that Bitcoin has slipped below its 0.95-quantile model price of $117.1K, an area where over 5% of supply, largely held by high-entry buyers, is now at a loss.

If the price remains under this threshold, it could pave the way for a deeper market pullback toward $108K. Historically, breaking this level has preceded longer consolidation cycles, reflecting structural fragility rather than momentary panic.

Long-Term Holders Shift Focus as Spot Volume Spikes

The prolonged selling activity by long-term holders (LTHs) continues to weigh on Bitcoin’s upward potential. Since July 2025, LTH supply has dropped by roughly 0.3 million BTC, indicating steady profit realization among early investors.

This trend has slowed momentum and increased the risk of demand fatigue. Unless new capital enters the market, Bitcoin may remain trapped in a consolidation pattern, facing periodic corrections before finding balance.

Meanwhile, spot trading activity soared during the latest liquidation wave. Binance saw heavy sell pressure, while Coinbase registered significant buying interest, suggesting institutional players were absorbing supply from retail panic.

The mild overall sell bias indicates that this was a localized deleveraging rather than a complete investor exit, keeping the broader market structure intact despite heightened volatility.

Bitcoin ETFs See 2.3K BTC Outflows After Price Drop

The aftershock of Bitcoin’s sharp correction has spilled over into ETFs and derivatives. U.S. spot Bitcoin ETFs recorded net outflows of 2.3K BTC this week, reflecting cautious investor behavior. Unlike previous selloffs, however, these outflows did not accelerate sharply, hinting at hesitation rather than full-blown capitulation.

In derivatives, the futures open interest drop of over $10 billion ranks among Bitcoin’s largest single-day declines. This collapse erased months of leveraged positioning and pushed funding rates to levels not seen since the 2022 FTX crash. Despite the pain, such a massive leverage flush often serves as a necessary cleansing phase, restoring balance and setting the foundation for a more sustainable recovery.

Also Read: Bitcoin Faces $110K Support Test with Over 90% of BTC Supply Still in Profit