The recent drop in Bitcoin (BTC) price from around $ 65,000 to around $ 30,000 didn’t force long-term owners to sell, Glassnode data shows.
The on-chain analytics platform revealed an increase in Bitcoin reserves in wallets with fewer unspent exits as BTC / USD offers declined.
In the meantime, The data also shows a bitcoin collecting race among miners – the companies that produce and supply freshly minted cryptocurrencies for retail use. As a result, the active supply of BTC began to decline in the past few sessions.
Short-term Bitcoin holders – companies that hold the flagship cryptocurrency for less than a week of accumulating – were the biggest sellers during the BTC / USD exchange rate decline. Data from Glassnode suggests that new entrants panicked BTC sales during the May slide. That month, BTC lost 38% from its all-time high.
The volatility of Bitcoin prices continues to explode in the short term with double-digit percentage up and down movements. The 24-hour Bitcoin volatility index on TradingView was around 19.70 on May 20, after bottoming out at 1.90 on April 2. This represents a 936% increase over the period the BTC / USD pair rose to an all-time high near $ 65,000 and corrected to $ 30,000.
The high volatility in prices was a sign that investors remained fearful or insecure about the impending bias of the Bitcoin market. The intraday candles on the previous chart showed continued higher volatility: the Sunday candle closed 34% lower than the previous session. Overall, however, the trend appeared to be declining.
There is a detail in all of this
Glassnode assumed that long-term owners will realize their profit or loss at some point (PnL). The analytics portal cited its own metric that reviews the level of exhaustion of long-term owners, that is, the point at which their ability to hold BTC breaks and leads them to realize their gains or losses in the market.
“The current level of net unrealized PnLs held by Long Term Holders (LTHs) tests the 0.75 level, which was the arm or break level between cycles after bulls and bears,” they wrote Glassnode analysts.
“This metric only rallied in the 2013 ‘Double Hike’ scenario. Should the LTHs continue to see a decline in their paper earnings, this could also lead to a new overhead source of supply. On the other hand, higher. On the other hand, higher Prices and a supply throttle from the buy-down would look like the 2013 double-up scenario. “
Bitcoin is macro-bullish
The only factor that separates the current Bitcoin holding scenario from the previous ones is the US billionaire deficit. The world’s largest economy has returned to its highest debt ratio since World War II. And on Friday, President Joe Biden announced another $ 6 trillion spending plan for 2022.
Overall, the plan would increase public spending to $ 8.2 trillion a year by 2031. That would result in annual budget deficits of more than $ 1.3 trillion and $ 1.8 trillion in 2022.
One of the biggest fears in the market is that the rise in public spending will lead to a dramatic rise in inflation.
Bitcoin demand has skyrocketed among institutional investors for its anti-inflation narrative. Supporters point out that only 21 million BTC tokens can be offered, making it an ideal store of value versus an infinitely printable US dollar.
Companies like Tesla, Square, MicroStrategy, and Ruffer Investments have included Bitcoin on their balance sheets as an alternative to cash. Billionaire investors like Stan Druckermiller, Paul Tudor Jones and Mike Novogratz have also allocated a significant portion of their investment portfolios to Bitcoin.
The fundamentals continue to offer bullish support for Bitcoin.
“”Bitcoin was made for this moment“said Dan Held, Kraken’s director of growth marketing.”We are in the largest money printing company in human history, and Bitcoin is the only way out“.