Here’s Why Bitcoin’s Not Keeping Pace With Nasdaq

When a market persistently drops to a particular price point, it’s less about recent developments, stories, or financial data. Instead, there’s a significant seller who believes the prices are inflated at that level. Markus Thielen, founder of 10x Research, explained this concept. As for Bitcoin, its November 2021 record high of nearly $70,000 is a price where long-term investors might be inclined to sell their coins since they’re the ones most likely to cash out.

As a researcher studying Bitcoin trends based on data from analytics firm CryptoQuant, I’ve observed an intriguing development: The number of Bitcoins that have been inactive for at least 12 months and 24 months has decreased. This decline suggests that some holders may have cashed out their profits as the Bitcoin price remains close to all-time highs.

“Ilan Solot, co-head of digital assets at Marex Solutions, mentioned in an email on Wednesday that addresses holding cryptocurrencies with inactivity for the past 1 to 2 years have been actively selling since the price reached a record high. This selling activity is counteracting the accumulation by long-term investors who have held onto their digital assets for over 3 years.”

Based on Thielen’s analysis, approximately 1.8 million Bitcoins have remained unmoved for over a decade, among which could be the 1.1 million coins mined by Satoshi Nakamoto himself. Thielen further pointed out that it is likely that most of the Mt. Gox creditors will exchange their Bitcoins for fiat currency once they gain access to their coins during the October/November 2024 distribution.

Mt. Gox, the collapsed cryptocurrency exchange that suffered a hack in 2014 resulting in over 142,000 Bitcoins (approximately $9.5 billion) and 143,000 Bitcoin Cash (around $73 million), is preparing to distribute these assets to its creditors as reported by CoinDesk in April. This distribution could significantly impact the prices of digital assets due to its substantial size. The trustees of Mt. Gox had previously established a deadline of October 31, 2024 for reimbursing the creditors.

One possible explanation for Bitcoin’s recent price downturn might be due to heightened selling from miners and coin creators. Miners are compensated with Bitcoins upon validation of transactions and blocks on the blockchain, as well as receiving income from transaction fees. Thus, an increase in their selling activities could potentially contribute to a decrease in Bitcoin’s price.

As a researcher studying the Bitcoin market, I’ve noticed a significant decrease in the computing power, or hashrate, dedicated to the Bitcoin blockchain this month. Specifically, it has dropped from 622 exahashes per second (EH/s) to 599 EH/s. This decline is indicative of miner capitulation, meaning that some miners may be struggling financially and choosing to sell their mining equipment or cease operations altogether due to the drop in Bitcoin’s price or profitability.