The largest cryptocurrency, Bitcoin (BTC), is currently trading at a level that is 13% below its record high of around $108,000. This is the lowest point since President-elect Donald Trump won the U.S. election in early November.
A Period of Correction
Since then, the price has spent several periods at 10% below the record high, a level that some investors term a correction. However, this time around, the selling pressure seems to be more intense, and it’s not just short-term traders who are responsible for the decline.
Long-Term Holders (LTHs) Unload BTC
The selling pressure originates with long-term holders (LTHs), which Glassnode defines as investors who have held bitcoin for at least 155 days. These LTHs tend to sell into price strength after accumulating bitcoin when prices are depressed.
Previous Research Indicates Significant Selling
According to previous CoinDesk research, LTHs were already distributing a significant amount of BTC about a week ago. Since then, they’ve picked up the pace and have reduced their total holdings to about 13.2 million BTC from around 14.2 million in mid-September.
Recent Sell-Offs
On Thursday, they sold almost 70,000 BTC, the fourth-biggest one-day sell-off this year, according to Glassnode data. This significant selling pressure has contributed to the price decline of around $94,500.
Short-Term Holders (STHs) Accumulate BTC
For every seller, there has to be a buyer. In this case, it’s the short-term holders (STHs) who have accumulated approximately 1.3 million BTC in the same time period. The number indicates they picked up coins from the LTHs and more.
Imbalance Between Sellers and Buyers
In the past few days, the narrative has changed, and LTHs are looking to sell more than short-term traders are looking to buy. This imbalance has contributed to the price decline of around $94,500.
Circulating Supply and Exchange Balance
There are 19.8 million tokens in circulating supply and another 2.8 million sitting on exchanges. Although that balance continues to fall – about 200,000 bitcoin has left exchanges in the past few months – it’s still a significant amount of BTC that is not being used for transactions.
Monitoring Bitcoin’s Price Activity
The cohorts mentioned above are key to monitoring bitcoin’s price activity in the next few days. Understanding their behavior will provide valuable insights into what can be expected from the price movement.
Long/Short Term Holder Threshold (Glassnode)
According to Glassnode, the long-term holder threshold is the number of coins that have been held for at least 155 days. The short-term holder threshold is the number of coins that have been held for less than 155 days.
Tracking the Long-Term Holder Threshold
In recent weeks, the long-term holder threshold has dropped significantly, indicating a large number of LTHs are selling their BTC. This trend will continue to be monitored in the coming days as it’s crucial for understanding the price movement.
Tracking the Short-Term Holder Threshold
On the other hand, the short-term holder threshold is increasing steadily. This indicates that more and more STHs are accumulating BTC. However, the number of coins being accumulated by STHs is still lower than what LTHs are selling.
Impact on Price Movement
The imbalance between sellers and buyers has significantly impacted the price movement. As long as LTHs continue to sell more than STHs accumulate, it’s likely that the price will decline further.
Expectations for Future Price Movement
As mentioned earlier, the cohorts mentioned above are key to monitoring bitcoin’s price activity in the next few days. Understanding their behavior will provide valuable insights into what can be expected from the price movement.
In conclusion, the selling pressure originating with LTHs is causing a significant imbalance between sellers and buyers. As long as this imbalance continues, it’s likely that the price will decline further. However, it’s essential to monitor the cohorts mentioned above in the coming days to understand their behavior and what can be expected from the price movement.
Key Points to Remember
- The largest cryptocurrency, Bitcoin (BTC), is currently trading 13% below its record high of around $108,000.
- Long-term holders (LTHs) are selling more than short-term traders (STHs) are buying, causing an imbalance between sellers and buyers.
- LTHs have reduced their total holdings to about 13.2 million BTC from around 14.2 million in mid-September.
- STHs have accumulated approximately 1.3 million BTC in the same time period.
- The circulating supply is 19.8 million tokens, and another 2.8 million sitting on exchanges.
Future Outlook
As the price movement continues to be monitored, it’s essential to understand the behavior of LTHs and STHs. If the imbalance between sellers and buyers persists, it’s likely that the price will decline further. However, if STHs continue to accumulate BTC at a faster rate than LTHs sell, it’s possible that the price will stabilize or even rise.
Recommendations
Investors should closely monitor the behavior of LTHs and STHs in the coming days. If the imbalance between sellers and buyers persists, it may be best to consider selling BTC. However, if STHs continue to accumulate BTC at a faster rate than LTHs sell, it may be worth considering buying more.
Conclusion
The selling pressure originating with long-term holders (LTHs) is causing a significant imbalance between sellers and buyers. As long as this imbalance continues, it’s likely that the price will decline further. However, monitoring the cohorts mentioned above in the coming days will provide valuable insights into what can be expected from the price movement.
Sources
- Glassnode
- CoinDesk
