Bitcoin Drops Below $78,000 as August Momentum Cools

Bitcoin briefly dipped below $78,000 on Tuesday, continuing a downward trend after dropping below $79,000 following a weekend above that threshold. The gradual decline, which leaves bitcoin nearly flat in the first week of September, reinforces the notion that bullish momentum has slowed and the debasement trade that drove its August rally has run its course.

Market data shows the cryptocurrency initially shrugged off bearish projections as it traded above $79,000, despite dipping below $78,800 twice. However, shortly before 11 p.m. EST on Monday, the price dropped below $78,000 again, this time without enough buying pressure to reverse the decline.

The downward momentum continued overnight. By 9:50 a.m. EST on Tuesday, bitcoin hit a daily low of $77,603. Although a relief rally pushed the price back above $78,000 to trade around $78,600 by 11:20 a.m. EST, its market capitalization stood at $1.58 trillion.

The price swing since Monday afternoon triggered $79 million in bitcoin liquidations, with long positions accounting for roughly 90% of the wiped-out bets. Across the broader cryptocurrency market, total liquidations reached $264 million, including $187 million in long positions and $77 million in shorts.

Some analysts expect bitcoin to trade sideways in the near term as market participants await key U.S. economic data. The U.S. Bureau of Labor Statistics is scheduled to release the August Producer Price Index (PPI) on Thursday, followed by the Consumer Price Index (CPI) on Friday.

The upcoming inflation prints arrive on the heels of a stronger-than-expected nonfarm payrolls report, which highlighted persistent resilience in the U.S. labor market. If inflation data reflects an unexpected uptick or fails to cool significantly, it would give the Federal Reserve further leeway to pursue a rate hike at its upcoming policy meeting.

Such a scenario poses a distinct headwind for bitcoin and the broader digital asset market. Higher interest rates elevate yields across traditional risk-free assets, such as U.S. Treasuries, suppressing investor appetite for speculative and non-yielding assets. Consequently, a tighter monetary outlook would likely constrain bitcoin’s upward momentum, keeping prices range-bound or pressuring the asset lower in the near term.

!“#$%&‘()*+,–./0123456789:;=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[]^_`abcdefghijklmnopqrstuvwxyz{|} !“#$%&‘()*+,–./0123456789:;=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[]^_`abcdefghijklmnopqrstuvwxyz{|}

Bitcoin Whale Paper Gains Reach a Record

Short-term holder whale unrealized profit and loss reached $9.07 billion on Sept. 4, the highest reading in the metric’s available history dating to 2016, according to an analysis published by Cryptoquant on Sept. 7. Cryptoquant contributor IT Tech described the figure as paper gains held by large wallets that acquired bitcoin within recent months.

The metric eased to $7.51 billion on Sept. 5 as bitcoin’s price declined slightly. That reading still ranked among the five highest in the chart’s observed period, with all five occurring during the previous two weeks. The concentration shows how rapidly profitability expanded among newer large holders during BTC’s climb above $80,000.

The contributor framed those gains as potential selling exposure rather than evidence that whales had already begun realizing profits and wrote:

“Unrealized profit at that scale is exposure. A cohort sitting on a record paper gain can turn into sellers the moment price wobbles, and STH whales are historically the fastest to take profit when it’s available.”

What the Whale Profit Metric Shows

Unrealized profit represents the difference between an asset’s current market value and its onchain cost basis before the asset is sold. It measures the profit available on paper, not completed sales or confirmed exchange inflows. Actual profit-taking requires holders to move or sell their bitcoin, following the basic distinction between holding an asset and executing a market trade.

Short-term holder classifications generally capture coins that moved recently rather than identifying every owner’s original purchase date. Glassnode’s short-term holder cost-basis methodology covers coins moved within the previous 155 days and held outside exchange reserves. Cryptoquant’s whale-specific metric further narrows the observed cohort to large holders, making the $9.07 billion figure a specialized dataset rather than a measure of all BTC investors.

A larger pool of profitable coins can raise the amount of supply available for sale, but elevated gains alone cannot establish whether holders intend to exit. Separate onchain data placed the broader short-term holder cost basis near $71,000 in late August, while a dense accumulation area between $62,000 and $65,000 formed a deeper support zone below the market.

Bitcoin’s Rally Faces Its Next Test

Bitcoin traded between approximately $79,300 and $79,500 earlier on Sept. 7 after retreating from an intraday high of $80,537. The pullback placed immediate support around $79,013, while the $76,300 to $77,000 region represented the next lower area if that boundary failed. BTC later fell below $79,000, putting that immediate support level under pressure.

Selling risk was not limited to recently acquired whale holdings during the opening days of September. A wallet created in 2016 moved 1,260.77 BTC worth more than $100 million, while nearly 75 physical Casascius bitcoins were redeemed during the month’s first six days. Those long-dormant bitcoin movements involved older holdings and remain separate from the short-term whale metric.

The analysis ultimately presented the market structure as a tension between established cost-basis support and profits that could become sell-side supply. The analyst wrote:

“The cost basis structure argues the floor under this rally is real, but the unrealized gain sitting on top of it argues that same floor is now being tested by its own success.”

Year-End Bitcoin Price Bets Get Wild as 11 AI Models Target up to $105K

Over the last week, bitcoin’s price has been trading between $76,200 to $82,100, and market sentiment has been far more…

Advertisement

Read Now

Year-End Bitcoin Price Bets Get Wild as 11 AI Models Target up to $105K

Over the last week, bitcoin’s price has been trading between $76,200 to $82,100, and market sentiment has been far more…

Read Now

Year-End Bitcoin Price Bets Get Wild as 11 AI Models Target up to $105K

Read Now

Over the last week, bitcoin’s price has been trading between $76,200 to $82,100, and market sentiment has been far more…