Bitcoin exchange reserves hit a 7-year low of 2.35M BTC, driven by institutional accumulation.
$707M in liquidations over 24 hours reflect market volatility, with Bitcoin dropping to $91,250.
Key events this week: DRV airdrop (Jan. 15), SOLV launch (Jan. 17), and CPI data release (Jan. 15).
Despite challenges, institutional interest and DeFi resilience highlight long-term opportunities.
The cryptocurrency market continued its decline for the second consecutive week, as macroeconomic concerns weighed heavily on investor sentiment.
A stronger-than-expected US labor market report released last Friday boosted risk-averse behavior, the Federal Reserve was quick to come up with its estimates on the matter, and the Federal Reserve’s halt on interest rate cuts is on the table, meaning the cost of borrowing will remain higher for longer, resulting in a widespread sell-off in both the crypto market and traditional indices.
In the past 24 hours alone, 256,111 traders were liquidated, with total liquidations exceeding $707 million, according to CoinGlass.
Ethereum led the pack with $172 million in liquidations, followed by Bitcoin at $157 million and altcoins collectively accounting for $147 million.
Bitcoin exchange reserves have dropped to their lowest point since 2018, with only 2.35 million BTC circulating on trading platforms, according to CryptoQuant.
Source: CryptoQuant
This drop highlights the growing accumulation by institutional investors, who are taking advantage of the opportunity to buy Bitcoin at discounted prices during recent corrections.
The downward trend in Bitcoin reserves that has been deepening since 2024 is considered by some to be a bullish on-chain signal, but more traditional investors remain expectant of the volatility that the change of government on January 20 in the United States may bring.
Source: Coinglass
Exchange reserves have been steadily declining since December 2024, coinciding with Bitcoin’s price consolidation around $95,000-$96,000.
Network activity is at its lowest since November 2024, as indicators like the “Short-Term Holders’ Spent Output Profit Ratio” (SOPR) suggest retail investors are selling at a loss.
Despite market volatility, institutional interest remains robust, with hedge funds increasing their exposure to BTC and Bitcoin ETFs reporting net inflows exceeding $1 billion during the week ending January 10, 2025.
Bitcoin’s price has been highly volatile, reaching a high of $102,000 earlier this week before dropping to a low of $91,250. Analysts expect the price to fluctuate between $98,301.83 and $117,358.92, with an average estimate of $107,830 for the month.
Factors Influencing Bitcoin’s Price:
Macroeconomic Pressures: Rising bond yields and a strong labor market continue to impact risk assets, including Bitcoin.
Retail and Institutional Dynamics: Growing institutional interest is contrasted by retail investors selling at a loss amid volatility.
Historical Patterns: Similar corrections in January 2017 and 2021 preceded significant rallies later in those years.
ENA Stakers Airdrop: Derive will launch its token DRV on January 15, 5% of the DRV supply will be distributed to ENA stakers.
SOLV Token Launch: Solv’s decentralized BTC Reserve token will launch on January 17.
ONDO Token Unlock: 2.4 billion worth of ONDO tokens will unlock on January 18. Most tokens will be allocated for protocol development and ecosystem growth.
US CPI Data Release: January 15 CPI data release, likely to influence both crypto and traditional markets.
The cryptocurrency market may be experiencing heightened volatility, but key trends like the all-time low in Bitcoin exchange reserves, growing institutional interest, and the resilience of DeFi protocols present significant opportunities.
As the sector continues to evolve, understanding these shifts and staying informed will be crucial for navigating the “Infinity Age” of crypto. Investors must balance caution with optimism to seize the potential of this dynamic landscape.
Above all, it is important to look at the crypto market with one eye and the traditional stock market with the other, and all the geopolitical changes that are occurring at the beginning of 2025. It is estimated that with Trump’s arrival at the White House, the markets will begin to discount possible changes in US policy and consequently in all its economic allies.