BTC Drops Below $81K Amid Government Transfers, Miner Sales, and Short-Term Holder Panic

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

Early this morning, BTC briefly dropped below $81,000 to $80,400 before rebounding above $82,000, currently trading around $82,500; ETH briefly fell to around $2,400 and is now trading below $2,500. Over the past 24 hours, approximately 180,000 traders across the market were liquidated, with total liquidation amounts nearing $1.1 billion, of which long positions accounted for about $935 million.

Glassnoderecently reported that the 7-day average trading volume of BTC spot and BTC ETFs on exchanges was approximately $6.8 billion, lower than about 90% of the periods since January 2024; over the past 30 days through October 5, the realized market capitalization of the crypto market was approximately $12.8 billion, while total purchases by ETFs, stablecoins, and corporate reserves amounted to only about $4.9 billion, with the remainder coming from existing market holdings being rotated at higher prices, indicating that the previous rally was largely driven by buyers stepping in at higher levels.

On the other side, selling pressure in the market has sharply increased: the U.S. government, major mining pools, and short-term BTC holders are all liquidating their positions in their own ways, leading to this rapid decline. However, from a medium- to long-term perspective, the market is still expected to maintain an upward trend in Q4.

Over the past three days, this downturn appears to have been primarily driven by selling pressure from the following three major market participants:

U.S. government: Over $1.54 billion in BTC transferred to Coinbase over the past three days, during which BTC fell 6.9%.

According to Lookonchain monitoring, the U.S. government deposited 17,733 BTC, worth $1.48 billion, into Coinbase Prime over the past three days, along with 750 WBTC, worth $62 million. During this period, the price of BTC fell by 6.9%.

Although the recent transfers by the U.S. government to Coinbase Prime, which offers both custody and trading services, do not necessarily indicate a full sell-off, according to Galaxy Research’s on-chain tracking, the U.S. government currently holds approximately 319,100 BTC, about 71% of which originated from BTC linked to LuBian and funds recovered from Bitfinex; the recently transferred BTC assets are also considered seized property of the U.S. government. However, the government’s transfer activity has inevitably caused unease in the crypto market, triggering a panic-driven sell-off. Below is the corresponding operational timeline.

Miner pool leader Wang Chun: Sold over $19.3 million in WBTC to acquire over 7,848 ETH

According to on-chain analyst Yujin monitoring, the address of Wang Chun, co-founder of F2Pool (0xF42...2b51), sold 235.5 WBTC on-chain after the early morning BTC decline, worth $19.31 million, receiving 7,848.5 ETH. The ETH price was $2,460, with an ETH/BTC exchange rate of 0.03.

Bitcoin short-term holders: Panic selling drives selling pressure to its highest level in nearly four months

Around 10 PM last night, CryptoQuant analyst Darkfost wrote that Bitcoin short-term holders (STHs) are showing clear signs of panic. Over the past 24 hours, STHs transferred more than 50,000 BTC to exchanges in a single-day peak. Of this amount, over 29,500 BTC were transferred at a loss, accounting for approximately 59% of all incoming BTC—the largest volume of losses by STHs in the past four months.

Although BTC price remained stable around $82,000 at the time, it sharply dropped to around $80,500 overnight, indicating that short-term holder selling still exerts a lagged impact on the market.

Although short-term selling pressure remains significant, from a medium- to long-term perspective, BTC and the broader market are still in a price recovery phase, with long-term selling pressure greatly improved compared to before August.

First, the large whale selling pressure is easing.

On October 5, Glassnode officially stated that the trend of BTC whales net depositing Bitcoin into exchanges has halted. This trend, which lasted over three months since the summer, was twice as long as any similar trend since 2023, and ended in late August, after which the flow of funds remained consistently negative. In other words, the selling spree by BTC whales has come to an end, and long-term holders continue to stand by time.

Second, BTC miners have stopped large-scale selling, significantly reducing the source of selling pressure.

Yesterday, CryptoQuant stated that Bitcoin miners have recently stopped large-scale selling. Since Bitcoin touched a low of $76,000 on August 21 and miner conditions shifted from “extremely underpaid” to “fairly paid,” there has been no further extreme outflow of miner funds.

CryptoQuant says that miner selling pressure was a significant supply source affecting Bitcoin prices during the 2026 bear market, and the disappearance of this stable selling pressure may help alleviate market supply pressure.

Third, spot demand for BTC has significantly improved, and the market has passed the peak risk level.

Yesterday, CryptoQuant analyst Darkfost wrote that recent demand for Bitcoin has significantly improved, particularly as spot demand continues to recover. Currently, total Bitcoin demand has returned to positive territory, exceeding 14,000 BTC, while futures demand remains relatively stable, averaging around 32,000 BTC recently. Spot demand is currently approximately -17,000 BTC; although still negative, this represents a substantial improvement from -207,000 BTC on September 20.

It believes that the current decline in Bitcoin's price, coupled with a gradual recovery in market demand, is a positive market signal.

Finally, Glassnode's market report released on October 7noted that, based on a two-month liquidation heatmap (which simulates the price levels at which leveraged futures positions would be liquidated), only about 17% of liquidation levels are currently above the price, and support levels near the BTC price expanded by approximately half over the past week:

• The nearest large liquidation price zone is just below the BTC price, between $81,700 and $83,300;
• The second liquidation level is near $75,000;
• The largest liquidation band is located in the $60,000 to $63,000 range.

If the BTC price falls further into these ranges, forced liquidations of long positions could exacerbate the broader market decline.

Regarding the market's future direction, representative viewpoints are divided into the following three camps:

First, there is the cautious perspective from traditional asset management giants.

On October 7, Chris Kuiper, Vice President of Research at Fidelity Digital Assets, stated: "The bear market may not be over yet." He believes that the rally since August could be the beginning of a new uptrend or merely a retracement within the bear market, as "price increases do not guarantee the end of a bear market"; according to the four-year cycle, November is a critical window to watch (the previous bear market low occurred in November 2022), but he emphasized that historical cycles have never precisely repeated themselves. A more positive signal is the sharp increase in volatility after a period of low levels from June to mid-August, a pattern resembling previous bear market bottoms, suggesting that selling pressure may be nearing exhaustion. Meanwhile, stablecoin transfers, RWA, and institutional participation continue to grow.

Additionally, investment bank TD Cowen recently raised its price forecast for Bitcoin, expecting BTC to reach approximately $109,000 by the end of 2026 and $280,000 by 2029.

Second, crypto analysts believe the bull market landscape still awaits confirmation from spot market indicators.

On October 6, crypto analyst Darkfost posted that the Bitcoin Bull Score Index remains firmly in bullish territory, currently scoring 80/100, with multiple indicators continuing to support BTC’s upward momentum.

He noted that the only relatively lagging factor at present is spot demand. As previously observed, spot trading volume remains low, so there has been no significant spot buying demand thus far. He believes that spot demand is the key missing element in the current BTC market movement, and this component is typically the last to materialize.

Third, cryptocurrency traders are bullish on Q4.

In early October, renowned trader Ansem stated that BTC, ETH, and SOL have recently held their range highs, showing healthy price action; although no large-scale liquidations have occurred yet, most market participants remain in incorrect positions, suggesting further upside potential. He also noted that a pullback and open interest (OI) washout may occur in October, but the market is still in the early stages of a bull cycle, where high-leverage long positions carry significant risk, while high-conviction spot positions remain relatively advantageous.

Crypto trader Killa also posted yesterday that Bitcoin once again failed to break above $87,000; the 10x long position established on the expectation of a breakout after a second test of the high has now been stopped out at breakeven. Due to the failed breakout and price returning to the entry level, he is currently monitoring the $80,000–$82,000 range and considering re-entering a 10x long position. Additionally, he stated he still holds BTC longs at $62,600 and $76,400, with no immediate reason to rush into new longs, but remains bullish and expects further price upside. He emphasized that the current market is in a low-cycle consolidation phase, while he primarily trades on higher cycles and stressed the importance of risk management.

Of course, while some are bullish, others are bearish—the crypto market has never lacked counterparties and traders ready to adapt their positions flexibly.

"Start with ten big goals": Begin reducing positions if BTC drops below $79,000; close all long positions if the daily candle closes below $78,000.

The whale "Set Ten Big Goals First" posted today noted that recent macro headwinds—including rising U.S. Treasury yields, stronger expectations for rate hikes, and higher oil prices—have clustered together, yet BTC has only pulled back by about 5%. Therefore, he believes the market remains in a strong trend and does not currently expect BTC to drop directly to $78,000 or $74,000. However, he also mentioned that he has set stop-loss conditions: if BTC falls below $79,000, he will begin reducing his position; if the daily close drops below $78,000, he will close all remaining long positions.

Yi Lihua: Tends to believe BTC will drop below $79,000; bullish on the bull market but does not short.

Yi Lihua also wrote today that Bitcoin has broken below $82,000, with the next support level at $79,000. However, given the pace of the decline over the past two days, the current correction is far from over; it is more likely to break below $79,000, after which we will assess the situation around $75,000.

In addition, it stated that it has consistently believed BTC would pull back at the $86,000 level but did not short it, as it still views the current trend as bullish and considers pullbacks to be normal fluctuations within a bull market. It adheres to the principle of “watching for pullbacks in a bull market but not shorting,” and patiently waits for the pullback to complete before buying the dip.