$72,700—Bitcoin's plunge to an 11-week low. Data from CryptoQuant shows that the average cost basis for short-term holders, at $75,700, has been breached, and 47,000 BTC have been sent to exchanges at a loss. My first reaction to these numbers wasn't panic; it was that leverage was being forced to pay its debts. October CPI came in hotter than expected, pushing December rate-hike expectations back up. Those who bought near the top couldn't hold on below their cost basis, so they had to sell.
What really strikes me as odd is the divergence in capital flows. U.S. spot Bitcoin ETFs saw $1.6 billion in net outflows in November, while equity ETFs were buying the dip. Barclays increased its holdings in BlackRock's Bitcoin ETF by 48%, to a total of $187 million as of September 30. Citigroup also opened a new $119 million position in Fidelity's Bitcoin ETF. Retail investors are realizing losses on-chain, while banks are adding to their positions on their balance sheets. These two groups aren't looking at the same picture at all.
My view is straightforward: this is leverage being flushed out, not the narrative falling apart. Once the cost basis of $BTC gets back above $75,700, the selling pressure will naturally ease.
What really strikes me as odd is the divergence in capital flows. U.S. spot Bitcoin ETFs saw $1.6 billion in net outflows in November, while equity ETFs were buying the dip. Barclays increased its holdings in BlackRock's Bitcoin ETF by 48%, to a total of $187 million as of September 30. Citigroup also opened a new $119 million position in Fidelity's Bitcoin ETF. Retail investors are realizing losses on-chain, while banks are adding to their positions on their balance sheets. These two groups aren't looking at the same picture at all.
My view is straightforward: this is leverage being flushed out, not the narrative falling apart. Once the cost basis of $BTC gets back above $75,700, the selling pressure will naturally ease.
