Leading cryptocurrencies traded lower on Monday as ongoing uncertainty regarding US-Iran negotiations constrained risk appetite across digital asset markets. Bitcoin (CRYPTO: BTC) declined 1.56% to $63,976.86, while Ethereum (CRYPTO: ETH) fell 2.13% to $1,874.37. In contrast, Dogecoin (CRYPTO: DOGE) posted a marginal gain of 0.33%, trading at $0.06992. The global cryptocurrency market capitalization contracted by 1.35% to $2.18 trillion over the same period.

The sell-off was accompanied by significant volatility in derivatives markets. Data from Coinglass indicated that over $200 million was liquidated in the preceding 24 hours, predominantly affecting bullish long positions. Bitcoin’s open interest decreased by 0.40%, aligning with the spot price decline. Despite the downward pressure, retail and whale traders on Binance increased their BTC long exposure following the price drop.

Equity markets also reflected the cautious sentiment. The Dow Jones Industrial Average fell 60.95 points, or 0.11%, to close at 53,975.98. The S&P 500 slid 0.06% to 7,753.11, and the Nasdaq Composite dropped 0.32% to 26,605.36. Crypto-linked equities underperformed broader indices, with Strategy Inc. (NASDAQ: MSTR) closing down 2.68% and Bitmine Immersion Technologies Inc. (NYSE: BMNR) falling 3.83%.

Geopolitical Context and Market Drivers

Market movements were heavily influenced by developments in US-Iran relations. Iranian President Masoud Pezeshkian reportedly called for a deal with the U.S. regarding the Strait of Hormuz, stating that the conflict must end. However, unconfirmed reports circulated that Iran had rejected negotiations with President Donald Trump, planning to wait out his term until 2029. No official confirmation was issued by Tehran, leaving investors in a state of uncertainty.

What the Numbers Show

On-chain data reveals a divergence between short-term price action and long-term holder behavior. Blockchain research firm Santiment reported that Bitcoin’s elite wallets—those holding at least 10,000 BTC—increased by 7% over the last two months, reaching a six-month high. This suggests supply is rotating toward stronger hands, a pattern often preceding bullish fluctuations. Conversely, CryptoQuant warned of an acute “top formation phase,” citing bearish divergence where higher price highs are forming lower MACD highs. The firm advised caution, noting that stronger cyclical entries may become attractive near $51,000.

A rare technical signal indicating a potential Bitcoin bottom is set to complete on August 31, according to analyst Oliver Velez. This specific pattern has emerged only three times in the past 15 years, coinciding with major cycle lows for the cryptocurrency each time. The completion of this signal suggests that Bitcoin may be nearing a significant turning point, with historical precedents pointing to substantial upside potential over the following year.

The signal, detailed in Velez’s weekly Bitcoin Intelligence Report, operates by measuring the S&P 500 in Bitcoin rather than the traditional dollar-denominated valuation. When the chart of the S&P 500 priced in Bitcoin rises, it indicates that Bitcoin is losing ground to equities; when it falls, Bitcoin is gaining relative strength. The critical pattern consists of three consecutive rising bars on a four-month chart, with each bar closing higher than the last. This configuration has historically signaled exhaustion among sellers and a shift in market dynamics.

Historical Performance of the Signal

The reliability of this indicator is underscored by its past performance. In every instance where the pattern completed, Bitcoin was trading at or near a major cycle low. The subsequent one-year returns were consistently strong, highlighting the signal’s predictive value for long-term investors.

Current Market Context

A fourth sequence of this pattern is currently forming. The first bar closed in December, the second in April, and the third bar is active now. Because the current bar has already surpassed the high of the previous bar, the pattern will complete regardless of further price action before the close on August 31. At present, Bitcoin’s price sits near $65,000, which would add a new entry to the historical table upon completion.

Velez outlines a clear condition that would invalidate the signal: if the next bar, covering September through December, closes green, it would indicate that Bitcoin continued to lose ground to stocks beyond the typical reversal point. This would mark the first failure of the signal in 15 years, a scenario that can be verified once the December 31 close is finalized.

Supporting Market Indicators

Beyond the technical signal, several fundamental factors support the notion of a market bottom. Bitcoin closed last week at $65,050, up 3.6%, successfully holding its 200-week moving average despite negative news flow including a hardware wallet exploit and the absence of a Clarity Act vote. Institutional interest remains robust, with ETF inflows reaching $865.3 million for the week—the strongest five-session period since June. BlackRock’s IBIT accounted for 80% of these inflows.

Exchange balances are at a seven-year low, while long-term holder supply has reached an all-time high. These metrics suggest that major institutional sellers have exhausted their supply during the recent decline, and price stability has persisted despite selling pressure. As Velez noted, the market was not rescued by buyers but rather stabilized because sellers ran out of inventory.