Bitcoin Plunges: Whales Resurface, Institutional Caution Deepens Market Woes

Bitcoin has experienced a precipitous decline, breaching the $85,500 mark in early Friday trading. This downturn comes amidst waning expectations for interest rate cuts and a significant sell-off by long-dormant “ancient whales.” In stark contrast to the resilience of U.S. equities, buoyed by Nvidia’s robust earnings, the cryptocurrency market finds itself in a solitary slump, with Bitcoin’s monthly losses now exceeding 20%. Analysts warn that as the year-end approaches, institutional capital is shifting towards a more conservative, defensive posture, signaling a notable weakening in overall market structure.

According to CoinGecko market data, Bitcoin is currently trading at $85,391, reflecting a 7.4% decrease over the past 24 hours.

The Resurgence of “Ancient Whales” Fuels Oversupply

Renowned cryptocurrency market maker FlowDesk has identified oversupply as the primary catalyst behind the current market downturn. Their recent market report highlights a significant phenomenon: the sudden awakening of “ancient whales”—long-dormant Bitcoin wallets that have held their assets for years without movement. These whales are now transferring tens of thousands of Bitcoins to centralized exchanges (CEXs).

This unexpected influx of supply has created immense selling pressure, overwhelming buying interest and leading to a “seller-dominated” spot market where demand struggles to absorb the available supply.

Institutional Shift: From Aggression to Defense

Beyond the whale activity, a critical shift in institutional investor sentiment is playing a pivotal role. FlowDesk’s analysis indicates that as the year-end approaches, fund managers are transitioning their operational strategies from aggressive growth to a more “defensive conservative” approach.

To safeguard their annual book profits, institutions are increasingly prioritizing “profit-taking” over “increasing exposure” to risk assets. This cautious mindset is rapidly depleting market liquidity, thinning out buy orders on the order books, and consequently making the market more susceptible to downward price movements.

Derivatives Market Echoes Bearish Sentiment

The weakening in the spot market is unequivocally mirrored in the derivatives market data. FlowDesk notes that large institutional buyers of Bitcoin and Ethereum are not rushing to “catch the falling knife.” Instead, they are strategically placing their buy orders at significantly lower price points, anticipating further declines.

Simultaneously, traders are actively rolling over their put options (bearish bets) and adjusting their strike prices downwards to maintain robust protection against continued downside risk. The current volatility curve exhibits a severe skew towards put options, an unambiguous signal that the market widely expects the downtrend to persist.

Data from Deribit, a leading crypto derivatives exchange, corroborates this sentiment. The once highly popular $140,000 Bitcoin call option (bullish bet) has now been eclipsed by the $85,000 put option, which holds the largest “open interest” across the entire Bitcoin options market. This dramatic shift underscores a clear pivot in market sentiment towards defense, with many participants now actively betting on further downside exploration.