Understanding Bitcoin's Recent Price Dips: A Look Beyond Selling Pressure

Recent fluctuations in Bitcoin’s market, often interpreted as selling pressure, may actually indicate deeper market structure issues. Analysis of on-chain metrics reveals that these dips are not primarily driven by investors exiting their positions, but instead reflect dynamics linked to market structure rather than panic selling.

Key Takeaways

Recent Bitcoin price drops are not mainly due to selling pressure from investors.
Market dynamics, particularly related to stablecoins, play a significant role in price movements.
Bitcoin's supply dynamics are changing, with a significant amount of previously inactive BTC becoming available.
Although selling pressure is currently outpacing demand, this phase may be nearing its end, setting the stage for renewed institutional interest.

Bitcoin

Analyzing Market Dynamics

Despite common perceptions that Bitcoin price decline stems from significant selling pressure, emerging data portrays a more nuanced reality. On-chain metrics suggest that there's minimal evidence of widespread selling from holders, indicating that the recent price dips arise not from investors liquidating their positions but rather from structural weaknesses in the market.

The Nature of Structural Weakness

The current Bitcoin pullbacks can be attributed to shorts placed in stablecoin denominations, rather than tangible selling from investors. As Sweep, co-founder of GlydeGG, pointed out on X, significant amounts of leverage enter the market through stable currencies. Market makers must maintain neutrality to balance the system and, therefore, sell spot BTC—not out of bearish sentiment but to uphold market equilibrium. This mechanism allows prices to drop without the usual signals of fear or panic since the main players are not making direct spot selling.

In the larger economic context, the U.S. does not need to sell assets to sway global markets; rather, its currency exports create leverage. This leverage induces synthetic pressure that leads to hedging, impacting spot markets and explaining why these recent sell-offs appear somewhat vacuous, particularly as retail investors have already pulled back.

At present, the market is realigning, with prices fluctuating against a declining currency, resulting in increased volatility even as investor confidence remains stable. This scenario does not signify a bear market; instead, it is a process of clearing liquidity providers (LPs), paving the way for major players to acquire BTC at lower prices without direct ownership.

Transformations in Bitcoin Supply Dynamics

According to Crypto Miners, a partner and ambassador for Wolfswapdotapp, Bitcoin's supply dynamics are undergoing rapid changes. K33Research reports that almost $300 billion worth of dormant BTC has come back into circulation in 2025. This development is largely attributed to long-term holder sales, substantial over-the-counter (OTC) deals, and transactions related to Exchange-Traded Funds (ETFs), marking one of the most significant supply unlocks in Bitcoin history.

Data from CryptoQuant reveals that the long-term holder distribution has recently reached unprecedented levels not seen in the past five years. Despite this, the prevailing selling pressure currently exceeds demand, with negative ETF flows and diminished retail participation.

Nonetheless, K33 suggests that this distribution phase may be nearing its limits. The initial sales from long-term holders might start to diminish by early 2026, possibly setting the scene for renewed accumulation as institutional rebalancing helps stabilize supply. Although the market now remains sensitive, this situation appears to be a redistribution phase rather than sheer panic selling.

Bitcoin BTC trading at $88,213 on the 1D chart | Source: BTCUSDT on Tradingview.com