As a seasoned researcher with over two decades of experience in the financial markets, I find myself intrigued by the current state of Bitcoin (BTC). The diamond-handed sellers are tempted, but the analysis warns that institutional buying is crucial to protect the BTC price breakout.
Bitcoin (BTC) is enticing “steady investors” to hold on as analysis suggests that robust institutional purchasing is crucial to maintain the BTC price surge.
As a researcher, I’ve observed a trend emerging from data provided by onchain analytics firm Glassnode. It appears that long-term Bitcoin (BTC) holders are gradually decreasing their exposure to the cryptocurrency.
Long-term holders up Bitcoin sales through November
The significant increase in the value of Bitcoin has brought us close to $100,000, but experienced traders aren’t hesitating to cash out their gains.
According to Glassnode, a platform that monitors changes in long-term holder positions over a 30-day period, there’s a growing trend of these holders selling off their assets more quickly.
Long-Term Holders (LTHs) are individuals who have been storing a specific quantity of Bitcoin for at least 155 days, representing the less speculative part of Bitcoin investors. Over the course of almost half a year, these investors have primarily accumulated Bitcoins. However, they have recently changed their strategy and started selling more than they are buying.
On November 20th, the change in Longhorn Tech’s Bitcoin holdings showed a decrease of approximately 245,000 Bitcoins compared to a month ago. This is the most significant decline in a 30-day period since April.
In simpler terms, Miles Deutscher, a cryptocurrency analyst, proposed that significant purchasing activity is needed to reverse the current long-term holding (LTH) trend. He identified U.S. spot Bitcoin exchange-traded funds (ETFs) as one of the primary candidates for this role.
In my analysis, it’s crucial that ETF inflows stay robust. If not, there might be a significant selling pressure from long-term investors that could potentially impact the market.
Over the past month, Exchange-Traded Funds (ETFs) have experienced unprecedented amounts of net investment, a trend that has significantly bolstered the industry this week by introducing options trading.
According to data from the UK-based investment company, Farside Investors, there was a total inflow of more than $770 million on November 20th.
The accompanying chart in Deutscher’s post pointed out that despite the surge in inflows, they weren’t enough to balance out the actions of Long-Term Holders.)
Bitcoiners sit on “significant” unrealized profits
Moving forward, Glassnode has recognized that Bitcoin owners across the board are currently in profitable positions, and this could potentially lead to shifts in Bitcoin’s supply dynamics.
With rising profits among market investors, there’s a greater possibility that increased selling pressure may arise,” states the recent issue of their weekly newsletter, “The Week Onchain,” published on November 20th.
Researchers emphasized the Market Value to Realized Value (MVRV) ratio, a key indicator that nearly approached levels last seen during Bitcoin’s historic high of around $73,800 in March.
They noted that Bitcoin’s price has surpassed its 1 standard deviation threshold, currently standing at approximately $89,500, in terms of fluctuations in its realized price.
“This signals that investors are now holding statistically significant unrealized profits, and suggests an increased likelihood of profit-taking activities.”
Glassnode added that crypto bull markets often see long phases of “overheated” metrics.
Despite this, markets have often stayed in an overheated condition for long durations, particularly when backed by substantial investments that can counteract selling pressure, the report found.
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2024-11-21 17:59