Bitcoin
Bitcoin Sell-Off Intensifying among Long-Term Holders, Research Finds
Investors who have held Bitcoin for a longer timeframe are now selling it to secure immediate profits, according to Glassnode.
The on-chain intelligence platform studied Bitcoin entities and the supply they hold in their wallets. It later divided the outcome into two categories: Long-Term Holders and Short-Term Holders.
As Glassnode explained, the Long-Term Holders, or LTH, are those wallets that have held Bitcoin for more than 155 days in a row. Similarly, the Short-Term Holders (STH) refers to those wallets that transferred their Bitcoin tokens to other addresses within the first 154 days after purchasing them.
The weighting factors, used for the classification of long-term and short-term holders. Source: Glassnode
The platform pitted both LTH and STH readings against one another, finding that the former’s supply plunged to 12.3 million BTC on November 19 from 12.6 million BTC on October 23. On the other hand, STH supply surged higher, illustrating that serious investors are selling off their holdings to secure gains.
Not Bearish
A sell-off exercise by the long-term investors did not put any negative pressure on the Bitcoin market. Surprisingly, it proved to be bullish for the cryptocurrency.
Long-Term Holder (LTH) Bitcoin supply vs. price. Source: Glassnode
Glassnode sketched the LTH Supply on Bitcoin’s price graph to understand their correlation. The platform found that changes in the former affected the latter inversely. That said, when the LTH supply increases, the Bitcoin price falls. Conversely, when it decreases, the cryptocurrency starts a bull run.
“Currently, we are seeing a downward spike, pointing to the fact that BTC from hodlers started to move on-chain, as a reaction to the recent price appreciation,” Glassnode stated. “Note that this has been commonly observed in previous cycles as well, and indicates that we are potentially at the early stages of a bull run.”
Meanwhile, the Bitcoin price appreciates when the STH supply edges higher. It is a clear indication of older cryptocurrency stashes getting reactivated in bull markets for trading, according to Glassnode.
“Currently, 12 million BTC of the LTH supply (~97%) and 3.5 million of the STH supply (~97%) are in a state of profit,” the firm added.
Bitcoin Outlook
The Glassnode study arrives when the Bitcoin price has hit a three-year high of close to $18,000. It represents nearly 147 percent on a year-to-date timeframe, led by a depreciation in the US dollar amid the Federal Reserve’s ultralow interest rate and infinite bond-buying policies.
Analysts anticipate that the BTC/USD exchange rate would grow back towards its record high near $20,000. It is because Bitcoin is scarcer, divisible, and easily transferrable. That technically makes the cryptocurrency superior to gold, a $9 trillion hedging asset.
“Where gold is an ancient store-of-value, Bitcoin is a *nascent* store-of-value with superior monetary properties to gold,” said Vijay Boyapati, a prominent crypto researcher.
“If one were to believe it eclipses gold’s market capitalization, due to these superior properties, Bitcoin becomes a very attractive asymmetric bet,” he added.
- Bitcoin has seen some mixed price action as of late, with bulls being unable to take control of its trend in the time following its rally up to $28,500
- The rejection here was quite intense, and it has yet to show any signs of strength in the time following this occurrence
- The fact that bulls have guarded against any deeper drawback is positive because it invalidates the possibility that this recent high is a blow-off top
- One trader is now noting that there is an incredibly bullish indicator that is flashing for Bitcoin
- He points to the cryptocurrency’s monthly RSI, noting that a monthly close above a specific level that it is nearing is historically followed by parabolic moves higher
- In the past, these movements have had an average return of 1,010%, but their size and length seem to diminish with time
Bitcoin and the entire crypto market have declined over the past 12 hours, which appears to be the direct result of the pressure that XRP is placing on the market due to its latest selloff.
Where the market trends in the mid-term likely won’t depend on XRP, which means that this latest round of selling pressure may mark a knee-jerk reaction from investors.
One analyst is noting that Bitcoin’s monthly RSI is flashing an incredibly bullish sign for where BTC trends next.
Bitcoin Struggles to Gain Momentum Following $28,500 Rejection
At the time of writing, Bitcoin is trading down just over 1% at its current price of $26,700.
The crypto has been trading between the upper-$26,000 region and the lower-$27,000 region throughout the past few days.
It has yet to garner enough buy-side support to break above the heavy resistance laced throughout the lower-$28,000 region. For now, this peak could mark a blow-off top.
Indicator Suggests BTC is About to Go Parabolic
One trader explained in a recent tweet that Bitcoin could be on the cusp of seeing a parabolic move higher in the days and weeks ahead.
He points to the cryptocurrency’s monthly RSI as an indicator for this possibility.
“BTC – Monthly RSI. Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”
Image Courtesy of il Capo of Crypto. Source: BTCUSD on TradingView.
The coming few days should shed light on Bitcoin’s trend, as continued weakness could confirm $28,500 as a local high and lead to a deeper retrace.
Featured image from Unsplash. Charts from TradingView.
Bitcoin has had an explosive breakout year as a maturing financial asset,. The cryptocurrency is finally being considered by institutional investors for the first time, during a year that will go down in history for unprecedented money printing.
The asset’s hardcoded digital scarcity is a primary driver of its boom and bust cycles, and in the year following each block reward halving, magic happens. With the new year right around the corner, here’s a look back at past crypto market cycles for a glimpse at what to expect from Bitcoin in 2021.
Looking Back At Historical Bitcoin Market Cycles
All markets are cyclical and go through distinct phases of bear and bull trends. These cycles can take place over the course of decades, or a handful of years. In crypto, cycles often move faster than traditional assets due to the always-on, 24/7 market.
But because Bitcoin is just over a decade old, there are only a couple of boom and bust cycles at which to glean any useable data. In technical terms, when Bitcoin breaks its former all-time high, the new bull market is on.
Fundamentally, this occurs every four years following the asset’s block reward halving. This built-in mechanism slashes the supply of BTC in half at a time when demand is beginning to resume.
RELATED READING | NY TIMES BESTSELLING AUTHOR: BITCOIN S2F IS FLAWED, NOT MATHEMATICALLY SOUND
The combined effect of suddenly diminished supply and growing demand throws buying and selling equilibrium so out of balance that price appreciates exponentially.
2020 has acted as the ideal example of the impact each halving can have on the market. Bitcoin went from “a fad” to full-blown FOMO in less than nine months, all because supply and demand is so favorable to positive ROI.
And while 2020 was definitely a breakout year for a bullish Bitcoin, it is next year that will make a new wave of Bitcoin billionaires.
Halving years are marked in blue. In the year following, the cryptocurrency goes full parabolic | Source: BLX on TradingView.com
Move Over 2020, Why 2021 Will Be The Cryptocurrency’s Best Year Yet
Glancing at the chart above and it’s shocking to see just how high Bitcoin has climbed in twelve years. During the twelve years of trading, the cryptocurrency has had three distinct halvings, cutting the reward miners receive from 50 to 25 BTC, then from 25 to 12.5 BTC, to the current 6.25 BTC.
Each time this happens, demand begins to so drastically outweigh the limited supply, the asset goes parabolic and rises exponentially.
RELATED READING | BITCOIN BULL RUN IS OFFICIAL ACCORDING TO MONTHLY RSI, MORE BULLISH THAN 2017
In the two post-halving years on record, the first resulted in well over 6,000% ROI and the second just under 2,000% ROI. What could 2021 bring crypto investors?
Another 2,000-6,000% return isn’t likely simply due to the law of diminishing returns, however, even a 400% increase from current levels would result in a price of $125,000 per BTC.
Featured image from Deposit Photos, Charts from TradingView.com
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