Is Bitcoin’s Sell-off Driven By Dormant BTC Wallet Activity?

Key takeaways:

Despite $1 billion in spot BTC ETF inflows, Bitcoin fell 2.8% as the market digested a multibillion-dollar 2011-era wallet transfer.

US import tariffs and fiscal deficits are likely weighing on Bitcoin investor sentiment.

Bitcoin (BTC) traded down to $107,400 on Friday after facing a strong rejection near the $110,500 level on Thursday. The drop coincided with $1 billion in net inflows into spot Bitcoin exchange-traded funds (ETFs) over two days. Traders are now scrambling to justify the 2.8% pullback, despite BTC having hovered around $107,400 for most of the prior week.

This decline could simply reflect profit-taking ahead of the weekend, particularly since Bitcoin was just 1.5% below its all-time high. Investors remain wary of the potential negative effects of a global trade war, especially after US President Donald Trump reaffirmed the Wednesday deadline for increasing import tariffs.

Dormant Bitcoin wallet spooks the market by moving 80,000 BTC

Some market participants argue that investors were alarmed after a long-dormant Bitcoin wallet moved coins for the first time in years. Onchain analysts speculate that a miner from 2011 was behind Friday’s transfer of 80,009 BTC. It is reported that this entity once held over 200,000 BTC.

Although concerns over a potential sale are valid, large holders moving dormant coins isn’t unusual. If the entity intended to sell, it would be counterproductive to move so many addresses at once, as that could draw attention and impact pricing. This type of movement, in fact, decreases the likelihood of an immediate sale.

Even in the case of an over-the-counter transaction, it seems improbable that a buyer would absorb $4.3 billion in Bitcoin in a single tranche. For comparison, Strategy accumulated 17,075 BTC throughout June. Still, large wallet transfers often trigger FUD (Fear, Uncertainty and Doubt), which can put short-term pressure on prices.

In May, addresses dating back to 2013 transferred over 3,420 BTC. In November 2024, another wallet moved 2,000 BTC that had been untouched for 14 years. Similar events occurred in March 2024, with 1,000 BTC, and in November 2023, with another 6,500 BTC. These isolated movements have not historically correlated with long-term trend reversals.

Related: Bitcoin to benefit from Trump’s ‘Big Beautiful Bill,’ analysts predict

Bitcoin’s most likely reason for its recent weakness reflects mounting macroeconomic concerns. Michael Hartnett, Chief Investment Strategist at Bank of America Global Research, reportedly advised investors to reduce exposure if the S&P 500 approaches 6,300.

As Bloomberg reported, Hartnett’s team observed that “bubble risks were rising” following the US government’s approval of “a $3.4 trillion fiscal package that cuts taxes.” The worsening fiscal outlook may dampen demand for long-term government bonds, which could in turn weigh on broader risk markets, including Bitcoin.

At the same time, the Trump administration has reportedly begun sending notices to other nations “setting unilateral tariff rates” if trade deals are not reached before next Wednesday’s deadline. This economic uncertainty, rather than any specific crypto-related factor, offers a more convincing explanation for Bitcoin’s inability to hold the $110,000 level.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.