- Exchange netflow turned positive, signaling weaker spot demand and sell pressure.
- Long liquidations accelerated the drop as leverage unwound across the derivatives market.
- Traders focus on $79K support, with potential rebound toward $86K if held, remains key.
Bitcoin slipped below the $80,000 mark this week as weak exchange outflows, heavy leverage, and renewed inflation fears combined to pressure the market. Although BTC recovered above $81,000 during Thursday trading, analysts said the recent sell-off exposed growing fragility beneath the surface of the market. Traders now watch whether Bitcoin can defend key support near $79,000 and avoid a deeper correction.
Exchange Flows Pointed to Weakening Demand
According to CryptoQuant data, Bitcoin outflows from exchanges dropped sharply by May 11. Daily withdrawals fell to roughly 19,995 BTC, far below the 28,000 to 35,000 BTC range seen earlier in the month. Additionally, the figure remained well under the period average of 25,600 BTC.
At the same time, exchange inflows held relatively steady. Consequently, netflow turned positive, signaling that more Bitcoin stayed on exchanges instead of leaving for private wallets. Traders often interpret positive netflow as a sign of increasing sell-side liquidity.
Moreover, the slowdown in withdrawals suggested weaker spot demand from buyers. That trend reduced the market’s ability to absorb sudden selling pressure. As liquidity accumulated on exchanges, downside risks grew significantly stronger.
Short Positions and Liquidations Accelerated the Drop
The derivatives market added another layer of pressure. Between May 8 and May 10, open interest climbed steadily above average levels. However, funding rates remained negative throughout that period, indicating aggressive short positioning from traders expecting further declines.
Once Bitcoin started falling, leveraged long positions quickly unraveled. On May 12 alone, long liquidations exceeded short liquidations by nearly twelve times. Over three days, forced liquidations erased approximately $109.7 million in bullish positions.
Besides the liquidation cascade, macroeconomic fears amplified bearish sentiment. Investors reacted cautiously to inflation concerns surrounding upcoming US CPI and PPI data releases. Consequently, uncertainty spread across risk markets, including cryptocurrencies.
Analysts Watch the $79K Support Zone
Despite recent weakness, Bitcoin still posted modest gains over the past week. BTC traded around $81,032 as of press time, with daily trading volume approaching $38 billion. Crypto analyst Ali Martinez noted that Bitcoin continues to trade within an ascending channel that has guided price action since April.
According to Martinez, Bitcoin previously rebounded strongly whenever the price touched the lower boundary of that channel. Earlier rebounds from $71,000 and $75,000 triggered rallies exceeding 10%.
Now, traders closely watch the $79,000 support level. If buyers defend that area successfully, Bitcoin could rebound toward the $86,000 region. However, a breakdown below the channel may expose lower support zones and extend the current correction.
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