The past week has been particularly challenging for cryptocurrency investors. A sharp overnight sell-off triggered liquidations worth hundreds of millions, followed by a volatile reaction to the May 10th Consumer Price Index (CPI) release. Despite the CPI meeting expectations, the market experienced a whipsaw: prices initially surged past $28,300 only to plummet by approximately 5% hours later, briefly dipping below $27,000 before recovering nearly half of the losses.
This erratic price action has been frustrating for both spot and derivatives traders. Compounding the pressure, the recent Ethereum Shanghai upgrade has unlocked a significant amount of ETH, potentially introducing sustained selling pressure into the crypto market. This on-chain data report will analyze these recent market dynamics, incorporating external capital flow data to provide a clearer picture of current conditions.
Market Price Overview
The week opened with Bitcoin trading around $29,000. It initially climbed to approximately $29,800 but failed to break the critical $30,000 resistance level. After briefly touching this high, a downward trend emerged. Significant consecutive sell-offs occurred on May 6th and 7th. The period of May 10th to 11th was marked by dramatic volatility, resulting in a closing price near $27,300.
On-Chain Analysis
Miner Revenue and Network Transaction Volume
Understanding the current state of on-chain activity is crucial before analyzing trader behavior. The recent explosion of BRC-20 and related meme coins has significantly increased transaction volume on the Bitcoin network, leading to block congestion and, consequently, a substantial rise in miner revenue.
On-chain charts show a blue line representing Bitcoin transaction count, with the shaded area indicating miner revenue. The data reveals that overall network activity has reached exceptionally high levels. While increased miner rewards are beneficial for network security, the ongoing congestion raises a concern: the growing number of BTC held by miners could become a considerable source of selling pressure in the future.
Accumulation Trend Score
With miner BTC holdings increasing, the next logical question is: what is the overall accumulation status across the network? The one-year Accumulation Trend Score provides insight. Following a period of strong accumulation in the latter half of April, buying momentum has drastically weakened in May, shifting into a distribution phase.
Although the accumulation strength in April was notably weaker than that seen at the end of the previous year, a significant amount of coin was still accumulated. This suggests the market may still possess underlying strength, potentially setting the stage for a recovery once the current downward trend concludes.
aSOPR (Adjusted Spent Output Profit Ratio)
To build on this perspective, the aSOPR metric helps identify where the market stands in the current cycle. Using 1.0 as a key level for resistance and support, the metric indicates that the market is once again testing its support zone. This level has successfully held through several tests since the beginning of the year.
While the current decline is painful, it may also present a potential opportunity for those looking to catch a rebound or add to their positions at lower levels.
Futures Market Liquidation Volume
The recent volatility has taken a heavy toll on futures traders. Data from the past month shows significant liquidation events. Green bars represent the value of long positions liquidated, while red bars show short liquidations. On May 10th alone, nearly $50 million worth of long positions were liquidated. Over the month, total long liquidations have exceeded $200 million.
This period has been a difficult journey for bullish traders. Interestingly, the overall leverage ratio across the market has not seen a dramatic increase. This indicates that these long positions were not necessarily wiped out due to extreme leverage but were more likely caught off guard by high volatility during attempts to buy the top, leading to cascading liquidations.
External Institutional Flows
Beyond the drama of liquidations, it's vital to gauge the sentiment of traditional institutional investors. Data from Coinshare tracking institutional capital flows in and out of crypto products shows a notable outflow this past week. Interestingly, institutions withdrew approximately $30 million from Bitcoin products while also pulling around $20 million from Bitcoin short products.
Ethereum saw outflows of about $2 million, while Solana experienced a net inflow of $3 million. In short, the week was characterized by a significant institutional retreat from Bitcoin. This capital rotation is likely driven by a desire to allocate funds to "more efficient" areas, such as traditional equity markets that rallied on positive CPI expectations. Ultimately, this institutional withdrawal is expected to dampen short-term market momentum.
👉 Explore real-time on-chain data tools
Frequently Asked Questions
What is causing the current selling pressure in Ethereum?
The primary source of selling pressure stems from the Shanghai upgrade, which enabled the withdrawal of staked ETH. This has unlocked a large amount of previously illiquid supply, allowing stakeholders to sell their coins on the open market for the first time in a long while, increasing available sell orders.
How does the Accumulation Trend Score work?
The Accumulation Trend Score is a metric that assesses whether larger entities are net accumulating or distributing coins. A high score indicates strong buying from whales and institutional-sized holders, while a low score suggests they are distributing their holdings or that smaller investors are driving the market.
Why did the price drop even though the CPI met expectations?
This is a classic "buy the rumor, sell the news" event. The market often prices in expectations ahead of time. When the anticipated news (a positive CPI print) finally occurred, traders who had bought beforehand took profits, triggering a sell-off. Furthermore, the data may have prompted a rotation of capital from crypto into traditional assets that benefit from economic stability.
What does aSOPR tell us about market bottoms?
The aSOPR metric tracks the average profit or loss of coins being spent. When it falls to or below 1.0, it often indicates that sellers are realizing losses or breaking even, which can signal panic or capitulation. Historically, this level has acted as a strong support zone, potentially marking a local bottom.
Are miner sales a significant threat to Bitcoin's price?
Increased miner revenue can lead to higher potential selling pressure, as miners often need to sell a portion of their block rewards to cover operational costs (electricity, hardware). During periods of high congestion and high fees, this selling pressure can become more pronounced if miners decide to liquidate their larger rewards.
How reliable are institutional flow reports for predicting price?
Institutional flow data provides valuable insight into sentiment from large, sophisticated investors. Significant and sustained outflows typically suggest a bearish short-term outlook from this cohort, which can negatively impact price momentum. However, it is just one indicator and should be used in conjunction with other on-chain and technical analysis.