Price declines, increased exchange inflows, and defensive positioning in derivatives suggest the market is entering a correction phase with heightened risk reassessment.
Technical Fragility and Risk-Off Selling
Today, the crypto market is under significant pressure, with the total market capitalization falling below $3.8 trillion — a nearly 5% drop in the last 24 hours. Bitcoin dropped below $110,000, and Ethereum slid under $4,000.
The correction comes amid mounting macroeconomic tensions: escalating U.S.-China trade conflict, a strengthening dollar, and rising bond yields — all pushing investors away from risk-on assets.
Popular cryptocurrencies that had shown steady growth recently are now undergoing strong profit-taking and forced liquidations, signaling a possible period of consolidation or a temporary correction.
On-Chain Indicators Point to Capitulation
While derivatives markets reflect short-term sell pressure, on-chain data reveals deeper signs of weakening investor confidence among large holders:
- Exchange inflows have increased 18% week-over-week — over $2.3 billion in BTC and ETH moved from cold wallets to exchanges, indicating readiness to sell.
- Stablecoin inflows to exchanges — traders are converting profits into cash equivalents, waiting for new entry points.
- Chaikin Money Flow (CMF) for top Layer-1 tokens has turned negative — a sign of reduced accumulation.
- Increased whale activity — large wallets holding LINK, SOL, and AVAX have moved assets to exchanges, likely for rebalancing or profit-taking.
- Network activity — such as the number of active addresses and transaction volumes — has stabilized, suggesting temporary exhaustion after weeks of growth.
Derivatives Market Shifts Into Defensive Mode
Data from platforms like Deribit and OKX shows a clear pivot toward hedging. The BTC options put-to-call ratio has reached 0.78 — the highest level in two months. This indicates that traders are actively insuring against downside risk.
Additionally, implied volatility has risen for short-term contracts, reflecting increased demand for protection and expectations of continued weakness.
Spot-to-futures basis premiums have flattened near zero — a clear sign that the dominant “bull market” strategy since early October has ended. This transition from speculative long positions to protective hedges often precedes phases of stabilization or trend reversals.
Exchange liquidity depth has declined, amplifying the impact of each sell wave. Liquidity providers are widening spreads, and some market makers are reducing exposure, causing prices to slip more easily and increasing the chances of micro-flash crashes.
According to Kaiko, the order book imbalance has shifted to a 60:40 ratio in favor of sellers — the weakest configuration since mid-August.
What’s Next: Signs of a Bottom
Despite the sharp correction, some analysts view it as a healthy pause within a broader bullish trend. If liquidations ease and exchange inflows stabilize, this could signal a potential market bottom.
Key Indicators to Watch:
- Declining negative funding rates and reduced volatility in open interest.
- Decreasing exchange inflows alongside stablecoin outflows — a sign of renewed accumulation.
- Recovery in CMF and growth in active addresses — evidence of new market participation.
Until then, caution is advised. Continued volatility and forced selling could deepen the correction by another 5–8%, especially if Bitcoin retests the $105K–$108K levels.
Conclusion
The current correction may be a healthy cooldown within a broader uptrend, but on-chain and market signals suggest it’s not yet time for aggressive entries. Investors should stay alert and closely monitor whale activity, exchange flows, and volatility in derivatives markets.
Frequently Asked Questions
Find answers to the most common questions below.
Macroeconomic pressures, such as U.S.-China trade tensions and rising bond yields, caused investors to exit risky assets, including crypto.
Rising exchange inflows, stablecoin deposits, whale activity, and negative Chaikin Money Flow (CMF) all point to selling pressure and reduced confidence.
It’s possible — if liquidation slows and accumulation resumes. But continued volatility and weak derivatives signals suggest caution for now.
This article is for general informational purposes only and is not intended to be, and should not be construed as, legal or investment advice. Crypto-assets are highly volatile, so only invest funds that you are willing to lose and use your own research and risk management.
