These Factors Could Trigger A Bitcoin Bear Market This August

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Bitcoin could be headed for massive headwinds in August, amid selling from whales and miners. Is BTC strong enough to absorb the pressure?

Bitcoin’s price is at risk as we head into August. There are now mounting concerns that the market may face a wave of selling over the next few weeks. This comes after the cryptocurrency experienced a strong multi-month rally, and several on-chain signals now indicate that the hype may be fading.

Miner Outflows Signal More Bitcoin Could Hit the Market

Bitcoin miners also appear to be selling again. Throughout July, data showed a spike in BTC outflows from miner wallets. This is important because miners tend to sell to cover operational expenses or to take advantage of rising prices.

Miners are offloading positions massively, Source: CryptoQuant

When many miners sell at the same time, it can overwhelm market demand and drag prices lower. According to CryptoQuant, the mean BTC per transaction sent from miner wallets rose steadily in July, suggesting growing selling pressure.

“Miners may be preparing to offload part of their reserves,” CryptoQuant noted. “That could create additional volatility if demand weakens.”

Dormant Whale Wallets Reactivate

The most disturbing development in July came from wallets that had been inactive for years. One of the biggest alerts came when a wallet holding 80,000 BTC (which had been dormant for over 14 years) suddenly transferred funds through Galaxy Digital.

Data from CryptoQuant shows that large transfers from Galaxy Digital wallets often come before sharp price pullbacks. On July 29, Galaxy moved another 3,782 BTC (worth over $450 million) to exchanges. This move raised alarm bells among traders, who feared an upcoming sell-off.

BTC transactions from Galaxy Digital wallet show major outflows, Source: CryptoQuant

Even more disturbing is how three other whale wallets, likely owned by a single entity, moved a combined 10,606 BTC (about $1.26 billion) after being inactive for years. The reactivation of these wallets have been considerable sources of selling pressure and have become a trend to watch in early August.

Long-Term Holders Are Locking in Profits Near $120K

Another sign of weakness comes from long-term Bitcoin holders (LTHs). These investors who are known for their patience, are now starting to reduce their exposure.

CryptoQuant data also shows that this group turned net negative in late July. This means that they’re selling more than they’re buying, especially as Bitcoin approached the $120,000 resistance level.

Bitcoin long-term holder net position turned negative, Source: CryptoQuant

According to analyst Burakkesmeci, this behavior is consistent with profit-taking ahead of a market pullback. In Q1, similar moves by long-term holders came before Bitcoin’s February decline below $75,000.

In essence, a repeat of that trend could spell trouble for August.

Why a Major Crash Is Unlikely (For Now)

Despite the warning signs, not all analysts are bearish. In a recent report, Kaiko pointed to Bitcoin’s strong market depth and liquidity, which makes it more capable of absorbing heavy selling.

Bitcoin has a great deal of market depth to absorb selling, Source: Kaiko

They also noted an increase in demand from treasury firms and professional traders, who tend to be less sensitive to short-term price moves. This could provide a buffer against extreme volatility.

“While August may be bumpy, the presence of [institutional] traders helps stabilize the market,” Kaiko wrote.