Bitcoin

Bitcoin Holders Resume Buying After Market Sell-Off

Published

1 month ago

May 22, 2024

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The basic laws of supply and demand determine the price action of any asset, including Bitcoin. When supply exceeds demand, the asset’s price tends to decline. Conversely, when demand outstrips supply, the price usually rises.

These same principles apply to cryptocurrencies, and on-chain metrics can provide valuable insights into Bitcoin holders’ behavior.

The Impact of Heightened Profit-Taking

When analyzing a Bitcoin bull market over the long term, the price movement typically exhibits significant upward volatility, mixed with periods of corrections and consolidation. Most investors know that financial markets do not consistently rise, leading to a dynamic interplay between supply and demand, resulting in periodic corrections.

This trend is evident when observing Bitcoin’s Realized Cap and Realized Profits.

Realized Cap: This adds up the value of all BTC based on the price when they were last moved, giving a clearer picture of the money truly invested in Bitcoin.
Realized Profits: This refers to the actual gains that BTC holders have made when they sell their Bitcoin for more than they paid.

As Bitcoin reached a new all-time high of over $73,000 in mid-March, its Realized Cap also increased, suggesting that most long-term holders were profitable. Consequently, some exited their positions, resulting in a significant spike in Realized Profits.

Bitcoin Realized Cap and Profits. Source: Glassnode

The rising supply of BTC on the market surpassed the demand levels, leading to a corrective phase that saw the price of Bitcoin dip below $57,000. This drop brought Bitcoin below its Short-Term Holder Realized Price, creating a sense of fear in the market, given that short-term holders are more prone to sell based on price volatility.

Realized Price: The average price at which all BTC were last bought. It is like finding out the average cost everyone paid for their BTC.
Short-Term Holder Realized Price: The average price investors paid for BTC that they have moved around in the last 155 days. These BTC are the ones most likely to be spent or sold soon.
Long-Term Holder Realized Price: The average price investors paid for BTC that they have not moved in over 155 days. These BTC are the least likely to be spent or sold soon.

The Short-Term Holder Realized Price, which currently stands at $60,500, served as an accumulation point despite investors’ fears. Indeed, long-term holders felt comfortable adding more BTC to their positions at this level after realizing profits in March.

Bitcoin On-Chain Cost Basis. Source: Glassnode

Bitcoin Supply-Demand Trends Shift

Bitcoin’s Long-Term Holder Net Position Change provides a glimpse into this behavior. After undergoing a prolonged distribution period, long-term holders have begun accumulating again, having amassed more than 70,000 BTC since early May.

Long-Term Holder Net Position Change: It shows how the amount of Bitcoin held by long-term investors increases or decreases over time.

Based on the simple laws of supply and demand, as demand for Bitcoin begins to outstrip the available supply of BTC in the market, the odds of Bitcoin resuming its upward trajectory improve.

Bitcoin Holder Net Position Change. Source: Glassnode

Observing Bitcoin’s Balance on Exchanges can corroborate these supply and demand dynamics.

Balance on Exchanges: This refers to the total amount of Bitcoin held in cryptocurrency exchange wallets.

Since early May, more than 30,000 BTC have moved to private cryptocurrency wallets for long-term holding, showing confidence among holders in Bitcoin’s future value.

Bitcoin Balance on Exchanges. Source: Glassnode

While assessing the future price action of any asset can be challenging, multiple on-chain metrics can hint at potential price points investors should pay attention to. One of these metrics is the MVRV Extreme Deviation Pricing Bands, which determines whether the price of Bitcoin is unusually high or low based on its historical averages.

MVRV: It stands for Market Value to Realized Value. Market Value is the current price of Bitcoin times the number of BTC in circulation, while Realized Value is the average price at which all BTC were last bought.
Pricing Bands: These bands show the upper and lower limits of Bitcoin’s price based on its historical MVRV values to help identify when Bitcoin is either extremely overvalued or undervalued based on historical price data.

Bitcoin recently moved back above the +0.5σ pricing band, which currently stands at $64,600. Historically, such an upswing has led Bitcoin to test the 1.0σ pricing band supported by rising demand. This pricing band is currently hovering around $77,000.

Summary and Conclusions

The basic laws of supply and demand dictate Bitcoin’s price movements. Indeed, prices fall when supply exceeds demand and rise when demand exceeds supply. On-chain metrics offer valuable insights into these dynamics, allowing analysts to understand Bitcoin holders’ behavior.

Recent data reveals a price decline below $57,000 as supply increased. However, long-term holders have demonstrated confidence by accumulating over 70,000 BTC since early May. This trend suggests resilience in the market despite short-term volatility.

Key metrics like Realized Cap and Realized Profits illustrate that many long-term holders were profitable at Bitcoin’s recent all-time high, leading to a wave of selling and subsequent price corrections. However, the accumulation by long-term holders at lower prices indicates a positive outlook for Bitcoin’s future value.

Overall, these on-chain metrics help identify shifts in supply and demand, providing a framework to understand Bitcoin’s price action and investor behavior and indicating potential upward trends as demand begins to outstrip supply.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Bitcoin

Bitcoin Crash: VanEck Sees an Opportunity

Published

3 hours ago

July 5, 2024

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VanEck remains optimistic as Bitcoin (BTC) price continues to nosedive in the aftermath of woes around the German government and Mt. Gox.

Market corrections are a dreaded scenario, spelling fear among traders. While the otherwise “weak hands” cower, the bold lot seize the opportunity to grow their bags.

VanEck Urges Traders: Buy Bitcoin During Market Panic

Describing the ongoing Bitcoin crash as “4th of July discounts,” VanEck sees BTC price falling to the $53,000 range as a ‘buy the dip’ opportunity. On-chain platform Santiment shares the sentiment, urging bold traders to seize the moment.

“Markets have continued to bleed, and social media is now showing historic levels of FUD. It is rare for an hour to go by where there are more mentions of “sell” than there are “buy” across crypto forums. But we’ve seen a few of these instances in just the past 24 hours, including the largest ratio of negative vs. positive comments thus far in 2024. For bold traders, this is a window where some may wish to be a true contrarian and buy into the crowd’s anger and frustration”.

Amid the negative market sentiment, crypto researchers observe elevated fear levels. This is warranted as many traders suffer losses. Hundreds of thousands are getting “rekt” amid an ongoing bloodbath. Derivative data analysis platform Coinglass reports over $650 million in total liquidations.

Pseudonymous trader CryptoNagato reported that this is the second-largest liquidation event in the Bitcoin market after the one right after the FTX collapse in November 2022. All indications point to the ongoing sell-off between Mt. Gox and the German government, with their voluminous transactions stirring markets.

In a Thursday post, German lawmaker and Bitcoin activist Joana Cotar slammed the government for its “hasty” actions selling Bitcoin. Calling the selling spree insensible and counterproductive, she urged the state to emulate the US and hold Bitcoin as a reserve currency.

“Instead of holding Bitcoin as a strategic reserve currency, as is already being debated in the USA, our government is selling on a large scale. I informed Michael Kretschmer, Christian Lindner, and Olaf Scholz, why this is not only not sensible, but counterproductive and invited them to our lecture event (Bitcoin Strategies for Nation States” on October 17th in the Paul-Löbe-Haus) with Samson Mow,” Cotar wrote.

Cotar’s pro-crypto stance was best seen in November when she backed Bitcoin as legal tender and advocated for its integration into mainstream German finance.

Whales Buy BTC at a Discount

Meanwhile, Ki Young Ju, co-founder and CEO of CryptoQuant, suggests that whales are buying the dip and effectively becoming true contrarians. Based on the report, these traders are opening long positions.

Whales in crypto are investors holding over 1000 BTC, which means they have the power to influence market prices due to their large portfolios. At the moment they are betting on the Bitcoin price increasing in the future.

Small Bitcoin whales opening long positions, — BTC Whales Open Long Positions. Source: CryptoQuant

CryptoQuant’s Young Ju shares the optimism, saying, “The upward cycle is not over yet.” Nevertheless, he indicates that the ongoing correction could bottom out around the $47,000 threshold, urging spot traders to wait for a strong buying trend. Looking at the weekly chart for the BTC/USDT trading pair, there is a demand zone around the $47,000 range.

Bitcoin price BTC/USDT 1-week chart, Source: TradingView — BTC/USDT 1-week chart, Source: TradingView

A demand zone is an area with significant buying interest. Market participants would be willing to step in and purchase Bitcoin at $47,000, effectively creating a support level that can potentially lead to a price reversal.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Bitcoin

Mt. Gox Begins Bitcoin, Bitcoin Cash Payouts: Key Details

Published

9 hours ago

July 5, 2024

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Mt. Gox, a name synonymous with one of the most dramatic episodes in the cryptocurrency world, has started disbursing Bitcoin and Bitcoin Cash to its creditors. This significant move was announced on July 5, 2024, marking a pivotal turn in the long-drawn rehabilitation process of the defunct Bitcoin exchange.

Bitcoin and Bitcoin Cash’s prices have been volatile amidst this development.

Mt. Gox Still Holds Bitcoin Worth $7.69 Billion

The repayment initiative stems from Mt. Gox’s complex bankruptcy proceedings. The firm filed for bankruptcy after a massive security breach in 2014 that resulted in the loss of 850,000 Bitcoins.

“On July 5, 2024, the Rehabilitation Trustee made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors through a part of the Designated Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan,” Mt. Gox announced.

Creditors must meet several conditions before further disbursements. These include validating the registered accounts’ authenticity and finalizing agreements with the involved cryptocurrency exchanges.

Furthermore, the Trustee highlighted the necessity of ensuring secure and verified transactions before proceeding with more repayments. It also urged patience among the eligible creditors awaiting their turn.

In a related report earlier today, Arkham, a cryptocurrency analytics firm, noted that Mt. Gox had transferred 47,228 Bitcoins, worth approximately $2.71 billion, from cold storage to a new wallet. Despite this substantial movement, over 147,687 Bitcoins, valued at $7.69 billion, remain in the Mt. Gox reserves.

Following the repayment news, Bitcoin’s market price experienced a sharp decline, plummeting to $54,500. This price point is noted as the lowest in the past four months. Moreover, Bitcoin Cash’s price went below $290, down by over 18% in the past 24 hours.

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Bitcoin

Here’s Why The Bitcoin Price Crashed Below $58,000

Published

1 day ago

July 4, 2024

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Bitcoin has dropped to as low as $58,000 in the last 24 hours, having failed to once again hold above the crucial support at $60,000. Different analysts have suggested that the CME gap caused this price decline and that BTC could enjoy a relief bounce going forward.

The CME Gap Caused Bitcoin To Decline Below $60,000

Crypto analyst Daan Crypto hinted in an X (formerly Twitter) post that Bitcoin experienced this recent price decline to close the CME gap around the $60,000 range. The CME gap is the difference between BTC’s price on the Chicago Mercantile Exchange (CME) futures market between when the market closed on Friday and reopened on Monday.

While sharing a chart of Bitcoin CME futures, crypto analyst Speed Racer also alluded to the CME gap as responsible for Bitcoin’s recent decline. He stated that the market makers were running the BTC market in the short term as there was no way they would leave a “$1650 CME gap from the weekend.”

Crypto analyst Ninja also explained that the recent price decline was caused by the CME gap and even tagged it as “bullish selling.” He assured that everything would be okay, with a market rebound likely on the cards. Ninja also urged market Bitcoin bulls not to panic, although he subtly admitted that the current market conditions are enough to make anyone panic.

Fortunately, the worst looks to be over, as Daan Crypto revealed that the CME gap has been fully closed. This suggests that Bitcoin should enjoy a relief bounce from its current price level. Crypto expert Michael van de Poppe also confirmed that the CME gap has closed and predicted that it’s time for BTC to bounce up.

Crypto analyst Titan of Crypto shared a similar sentiment while revealing that the CME gap has been filled. He claimed that nothing was holding Bitcoin back now and that it was time for the flagship crypto to send. From the chart the analyst shared, BTC could rise to $72,000 on its next leg up.

The CME Gap Might Not Be The Only Problem

Selling pressure on Bitcoin is another problem that is responsible for its price decline. Data from Farside Investors shows that the Spot Bitcoin ETFs are still witnessing huge net outflows, with fund issuers having to offload their BTC holdings to fulfil redemptions.

There is also significant selling pressure from the German government, which still appears to be selling its Bitcoin holdings based on data from Arkham Intelligence. This is in addition to concerns about the selling pressure that BTC could witness once the defunct crypto exchange Mt. Gox begins to repay its creditors about $9 billion worth of crypto.

At the time of writing, Bitcoin is trading at around $58,600, down over 3% in the last 24 hours, according to data from CoinMarketCap.