As a long-term crypto investor with experience in monitoring market trends, I find the recent developments in the Bitcoin market concerning. Last week’s 6% drop in BTC value and the break of U.S. spot Bitcoin ETFs’ 20-day inflow streak have raised some red flags.
Last week saw a significant change in the crypto market’s momentum. Bitcoins (BTC) price decreased by more than 6%, and US Bitcoin exchange-traded funds (ETFs) experienced net withdrawals totaling hundreds of millions of dollars, ending their 20-day streak of inflows.
Based on the most recent Bitfinex Alpha analysis, it was primarily long-term investors, large traders (whales), and miners who sold bitcoin, contributing significantly to its recent price drop. This occurred both through transactions on cryptocurrency exchanges and over-the-counter deals.
Selling Pressure From LTHs and Whales
As a long-term crypto investor, I often find myself reevaluating my holdings during bull market cycles, especially when the market enters a consolidation phase like the current one. During such periods, I may choose to sell a portion of my investments gradually. Last week, I noticed that this group of investors was responsible for the majority of the selling pressure in the market. Our actions significantly outpaced the spot ETFs, indicating a notable shift in sentiment among us long-term holders.
Long-term Bitcoin investors’ monthly adjustments to their Hodler Net Position, as represented by this metric, provide insight into the level of selling pressure in the market. If long-term holders are offloading their bitcoins, the metric will show a negative value, while a positive value indicates they are buying. Over the past nine days, this indicator has displayed a consistent negative trend.
Large-scale Bitcoin investors, or “whales,” have been actively moving large quantities of the cryptocurrency to exchanges lately. This trend is signified by an uptick in the percentage of total inflows coming from the top ten depositors into these trading platforms. It’s reasonable to assume that this surge in whale activity could be a precursor to selling their Bitcoin holdings.
During the current crypto market sell-off, which is less intense than the one seen in April, Bitfinex analysts pointed out that it underscores the impact of long-term Bitcoin holders on market trends. This event also serves as a reminder that long-term investors and large whale players collectively own the majority of Bitcoin, exceeding the amount held by spot Bitcoin Exchange Traded Funds (ETFs). The actions of these investors can significantly influence market liquidity and price fluctuations during crucial market periods.
Miner Reserves Deplete
Last week, I noticed a significant drop in the Bitcoins held by the miners. This downturn came after a gradual decrease in their reserves preceding the Bitcoin halving.
Around March 2024, the bitcoin price reached a peak, coinciding with a substantial drop in miner holdings. This decrease in miner reserves implies that they were offloading their stocks to profit from elevated prices. At that juncture, miners adopted this strategy as they also needed to sell reserves to finance investments for upgrading equipment and enhancing operations prior to the upcoming Bitcoin halving. (Bitfinex’s statement paraphrased)
Experts believe that miner productivity is continuing to be a challenge due to the decrease in block rewards. These miners are adding to the ongoing market selloff, with their holdings reaching a four-year minimum.
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2024-06-18 11:52