Bitcoin Slides Under $81,000 as Government Transfers, Miner Selling and Short-Term Holder Capitulation Hit the Market

Bitcoin fell sharply in early trading, briefly dipping below $81,000 to around $80,400 before rebounding above $82,000. It was last changing hands near $82,500. Ether slid to roughly $2,400 at the lows and is now trading below $2,500. Derivatives positioning amplified the move. Over the past 24 hours, roughly 180,000 traders were liquidated across the market, with total liquidations close to $1.1 billion. Long positions made up about $935 million of that figure. On activity and flows, Glassnode said the seven-day average trading volume for BTC spot plus BTC ETFs on exchanges was about $6.8 billion, placing it below roughly 90% of readings since January 2024. Glassnode also estimated that over the 30 days through Oct. 5, the crypto market's realized market capitalization increased by about $12.8 billion, while combined buying from ETFs, stablecoins and corporate reserves totaled only around $4.9 billion. The remainder reflected rotation from existing holders selling into higher prices, suggesting the prior rally relied heavily on incremental buyers stepping in at elevated levels. Selling pressure has since intensified, with three groups cited as key drivers of the latest pullback: the U.S. government, major mining participants and short-term Bitcoin holders. U.S. government transfers raise market anxiety Blockchain trackers flagged sizeable government-linked movements. Lookonchain reported that over the past three days the U.S. government deposited 17,733 BTC (about $1.48 billion) into Coinbase Prime, alongside 750 WBTC worth roughly $62 million. Over the same window, BTC declined 6.9%. Coinbase Prime provides custody and trading services, so the transfers do not automatically confirm immediate selling. Galaxy Research's on-chain tracking estimates the U.S. government holds around 319,100 BTC, with about 71% tied to Bitcoin associated with LuBian and funds recovered from Bitfinex. Still, the transfer activity was widely read as potential supply overhang, contributing to risk-off sentiment. F2Pool co-founder Wang Chun swaps WBTC for ETH On-chain analyst Yujin said an address linked to Wang Chun, co-founder of F2Pool (0xF42...2b51), sold 235.5 WBTC after the early-morning BTC slide. The transaction was worth about $19.31 million and was used to acquire 7,848.5 ETH. The implied ETH price was about $2,460, with an ETH/BTC rate near 0.03. Short-term holders send BTC to exchanges at a four-month peak in realized losses CryptoQuant analyst Darkfost wrote around 10 p.m. that short-term holders (STHs) were showing clear signs of capitulation. In the past 24 hours, STHs sent more than 50,000 BTC to exchanges, marking a single-day peak. More than 29,500 BTC of those inflows were transferred at a loss, accounting for roughly 59% of incoming BTC—the largest STH realized-loss volume in nearly four months. Darkfost noted that even as BTC was holding around $82,000 at the time of the observation, the market later dropped to around $80,500 overnight, highlighting that STH selling can have a lagged effect. Medium-to-long-term backdrop: long-term selling pressure eases, liquidation zones in focus Despite heavy short-term selling, several indicators point to improving longer-term conditions. Glassnode said on Oct. 5 that the multi-month trend of BTC whales net depositing coins to exchanges has stopped. The exchange-inflow trend lasted more than three months from the summer—about twice the length of any similar episode since 2023—and ended in late August, after which flows remained net negative. The implication: whale-driven distribution has cooled and longer-term holders continue to sit tight. CryptoQuant also said miners have recently paused large-scale selling. Since BTC bottomed near $76,000 on Aug. 21 and miner conditions shifted from "extremely underpaid" to "fairly paid," the data has not shown another bout of extreme miner outflows. CryptoQuant argued that miner selling was a major source of supply pressure during the 2026 bear market, and that the absence of this steady selling could ease supply overhang. Demand indicators are also improving. Darkfost wrote that overall Bitcoin demand has moved back into positive territory, exceeding 14,000 BTC, while futures demand has been relatively steady at around 32,000 BTC on average recently. Spot demand is about 17,000 BTC; while still negative, it represents a sharp improvement from roughly -207,000 BTC on Sept. 20. He characterized the combination of a price pullback and gradually recovering demand as constructive. Glassnode's Oct. 7 market report added a two-month liquidation heatmap view. It estimated only about 17% of liquidation levels sit above the current price, while support levels near BTC expanded by around half over the past week. Key liquidation zones highlighted were: - $81,700 to $83,300 just below spot - Around $75,000 as the next level - The largest band at $60,000 to $63,000 A deeper drop into these zones could trigger additional forced long liquidations and intensify downside moves. Outlook debate: bear-market caution, spot confirmation still missing, Q4 optimism among traders Market views remain split. Traditional asset managers remain cautious. On Oct. 7, Fidelity Digital Assets research VP Chris Kuiper said, "The bear market may not be over yet." He argued the post-August rally could mark a new uptrend or a bear-market retracement, stressing that price gains alone do not confirm a cycle turn. Kuiper pointed to November as a key window within the four-year cycle framework, while emphasizing cycles never repeat perfectly. He also highlighted the recent surge in volatility after a low-volatility stretch from June to mid-August as a pattern that has resembled prior bear-market bottoms, potentially signaling selling exhaustion. He added that stablecoin transfers, RWA activity and institutional participation continue to rise. TD Cowen has also lifted its Bitcoin forecast, projecting BTC at roughly $109,000 by end-2026 and $280,000 by 2029. Crypto analysts see bullish structure but want spot-led confirmation. Darkfost said on Oct. 6 that the Bitcoin Bull Score Index remains in bullish territory at 80/100, with multiple indicators supporting upward momentum. The key laggard, in his view, is spot demand: spot volumes remain low and meaningful spot buying has yet to appear. He described spot demand as the missing ingredient that often arrives last. Traders are leaning constructive on Q4 but stress risk control. In early October, trader Ansem said BTC, ETH and SOL have held their range highs with healthy price action. He suggested many participants remain positioned incorrectly, leaving room for further upside, while warning October could still bring a pullback and an open-interest washout. In his view, the market is early in a bull cycle, making high-leverage longs risky, while high-conviction spot exposure remains comparatively attractive. Trader Killa said BTC failed again to break above $87,000, stopping out a 10x long at breakeven after the attempted breakout faded. He is now watching the $80,000–$82,000 zone and considering re-entering a 10x long. He added he still holds BTC long positions from $62,600 and $76,400, sees no need to rush into fresh leverage, but remains bullish and expects higher prices, while emphasizing risk management. Whale and trader positioning: key levels at $79,000 and $78,000 The whale account "Start with ten big goals" said macro headwinds—rising U.S. Treasury yields, firmer rate-hike expectations and higher oil prices—have converged, yet BTC has only pulled back about 5%, which he reads as evidence of underlying strength. He does not expect an immediate drop straight to $78,000 or $74,000, but set clear risk limits: he would begin trimming if BTC falls below $79,000 and would close all remaining long exposure if the daily candle closes below $78,000. Yi Lihua wrote that after BTC broke below $82,000, the next support is $79,000. Given the speed of the two-day decline, he believes the correction is likely not finished and may break below $79,000, with attention shifting toward $75,000. He said he had anticipated a pullback from the $86,000 area but did not short, maintaining a bullish view of the broader trend and treating pullbacks as normal bull-market volatility, preferring to wait for the correction to complete before buying the dip.