Permanent profit-taking has slowed Bitcoin’s bottoming out so far. The longer this trend continues, the more investors are likely to participate in the distribution.
The crypto market is gradually breaking out of the trough that the Flash Crash tore into the May performance. The total market capitalization makes up 11 percentage points in a daily comparison and pushes itself back to over 1.7 trillion US dollars. The crypto reserve currency also starts the new month under a green sign. On a daily basis, the Bitcoin price posted a plus of 6.5 percent and was thus quoted at 37,223 US dollars at the time of going to press.
The price gains in Altcoins look even clearer. At the time of going to press, Cardano (ADA) is the only top 10 coin that just missed a double-digit price premium with a plus of 9.6 percent. Ethereum (ETH) was able to increase by 12 percent to 2,672 US dollars in the last 24 hours and has thus shortened the gap to the 3,000 mark by a good deal. Binance Coin (BNB) and XRP are each increasing by 14 percent, Dogecoin (DOGE) by 11 percent. However, the spearheads form the lower ranks of the ten largest cryptocurrencies. Polkadot (DOT) rushes away with a price increase of 16.9 percent, and the daily performance of number ten, Uniswap (UNI), is also convincing with an increase of 15 percent.
Bitcoin trench warfare
The bulls are taking the reins back into their hands to usher in a trend reversal, but it is still premature. Or as Glassnode puts it in the current Week-on-Chain report:
A period of consolidation can be expected as the market has to deal with the dramatic sell-off of the past few weeks.
This phase is characterized by a high volume of sales and subsequent purchases. The question of “whether the market has returned to an area in which it is recharging” can therefore be answered with a view to the Bitcoin distribution among investors. Glassnode clusters investors into two groups: Short Term Holders who hold Bitcoin for less than 155 days and Long Term Holders who hold their BTC for more than 155 days. According to the blockchain analysts, the “relative mood” in the crypto market can be derived from the profits and losses as well as the spending behavior of the investor groups.
Unsurprisingly, the evaluation shows that short term holders in particular have made losses in the past few weeks. As the following graphic shows, only a small proportion of long-term investors are in the red.
A question of distribution
Overall, long term holders dominate the holdings, around 69 percent of the BTC offer is on the part of the Hodler. Those of them whose coins have slipped into the red only hold 0.5 percent of the amount on offer. In addition, the long-term investors have “returned to accumulation”. This should have a positive effect on the further price development: “Should this trend continue, it could indicate that a longer-term supply shortage is involved”.
In contrast, short term holders only hold 4.5 percent of the BTC supply in profit, but 26 percent in the loss. With a vast majority of this group of investors losing, they are “the most likely source of selling pressure now and in the future”.
Long-term investors also receive support from miners who also accumulate their stocks. Nevertheless, the imbalance in the Bitcoin distribution of various types of investors, measured according to profit and loss, could “signal the beginning of bearish trends”. Since Bitcoin could be pushed back again and again by sales of the short term holders, long-term investors could “take remaining unrealized profits”. In other words, the longer the battle of strength between bears and bulls lasts, the higher the probability that Hodler will also realize their profits.