Dormant Whale Sell-Off and ETF Outflows Weigh on Bitcoin, Analyst Warns

Bitcoin slide below $110,000 has exposed fragility in the market’s structure, with thin liquidity, leveraged positioning, and heavy ETF outflows amplifying the sell-off, according to Leo Zhao, Investment Director at MEXC Ventures.

Key Takeaways:

• Bitcoin’s plunge below $110K was fueled by thin liquidity, liquidations, and whale sell-off.
• ETFs saw over $1B in outflows while investor rotation into Ethereum intensified, adding pressure on BTC.
• Analyst warns Bitcoin sits at a “critical inflexion point” near $100K–$120K.

After briefly rising above $117,000 following Federal Reserve Chair Jerome Powell’s dovish Jackson Hole comments, momentum failed to hold.

Zhao said the drop reflected “a combination of thinning liquidity, ETF repositioning, and heavy profit-taking from OG BTC holders.”

More than $900 million in leveraged positions were liquidated, showing how stretched exposure had become before selling pressure intensified.

One of the main triggers was the movement of 24,000 dormant Bitcoin onto exchanges, which Zhao said “cascaded through an already fragile order book” and helped spark a flash weekend crash.

A dormant whale woke up after 5 years and sold 24,000 BTC for ETH.

That single move crashed Bitcoin to $112K and erased $45B in market value.

The entity still holds 152,874 $BTC from wallets with funds dating back 6 years. pic.twitter.com/cM0SuIYxBt

A recovery attempt early this week stalled at $113,000, signaling bears are seeking to cement control.

Bitcoin exchange-traded funds, which had recently offered price support, recorded over $1 billion in outflows last week — their steepest since March. The reversal of what had been steady inflows removed a key stabilizing factor.

At the same time, investor rotation into Ethereum has accelerated. ETH-linked products drew multi-billion-dollar inflows in August as the token outperformed Bitcoin, leaving BTC “temporarily lagging in the capital rotation cycle,” Zhao noted.

On-chain data also showed realized profits collapsing toward breakeven, reinforcing fading market conviction.

#ETHEREUM is MUCH more than #BITCOIN!

ETH: Deflationary, yield-generating, low-energy, global validator network.
BTC: Fixed supply, no yield, energy-intensive mining.

One's digital oil powering a new economy, the other's digital gold. pic.twitter.com/oSLLT9IrHg

Short-term rebounds have so far been unsustainable, with traders focusing on downside protection and hedging strategies.

Despite weak retail sentiment, Zhao said institutional and sovereign buyers remain active. These players have been scaling into positions during the pullback, extending exposure while retail demand softens.

Bitcoin now sits at what Zhao described as a “critical inflexion point,” with two possible near-term paths: consolidation in the $110,000–$120,000 range or a break lower to test psychological support at $105,000–$100,000.

“The absence of a fresh macro catalyst… is likely to drive BTC into a period of market consolidation as the market digests the recent distribution,” he said.

While the near-term picture appears unsettled, Zhao stressed that Bitcoin’s long-term foundation remains intact. Institutional accumulation continues to outpace new issuance, creating a structural supply squeeze.

He concluded that once macro headwinds ease, Bitcoin retains the basis “for another attempt at record highs of $130,000 before the EOY.”

Bitcoin could be on track for a major rally this year, according to Leah Wald, CEO of SOL Strategies.

Last week, Wald said she sees the world’s largest cryptocurrency potentially climbing to around $175,000 by year-end, a target she described as conservative compared to projections from other top investors and fund managers.

Longer term, Wald pointed to ambitious estimates suggesting Bitcoin could reach $1 million by 2030, underlining the growing conviction among institutional players.

However, Galaxy Digital CEO Mike Novogratz has pushed back on predictions that Bitcoin could hit $1 million in the near term, warning that such a move would likely reflect a collapse in the US economy rather than a crypto success story.

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