As the December 6-7 weekend approached, Bitcoin's persistent downturn presented challenges for stakeholders, even against a backdrop of robust stock market performance. The primary instigators of this trend were seasoned investors, who intensified sales activities. However, the market also navigated through various challenging scenarios, such as concerns surrounding MSTR and discussions on Japan’s potential interest rate hikes. This raises the question of whether the pressure from long-term investors has truly diminished.
Are Veteran Bitcoin Holders Driving the Decline?
Long-standing Bitcoin holders were pivotal in influencing market prices through their high-volume sales activities. Their actions, driven by the conversion of their assets to cash and leveraging positions, came during a period of lackluster market sentiment fueled by negative news, further impacting Bitcoin’s value. Presently, the cryptocurrency is striving to maintain a position above $90,000, falling short of its $80,000 target on multiple occasions.
The silver lining is that these older investors seem to be nearing a point of selling fatigue. This observation is supported by a CryptoQuant analyst, who highlights on-chain data indicating a reduction in sales pressure from these investors, particularly those holding assets over five years.
What Keeps Bitcoin Grounded?
Bitcoin’s pricing struggles can be attributed to its realized price sitting at $81,000, an important psychological threshold. According to OnChainMind, a cost metric focusing on active market trades—excluding dormant supply—reveals the true average cost in the active market, suggesting the current advantage lies with the bulls.
Even though the year began with more pronounced capital inflow, net ETF inflows remain positive at $22 billion, providing stability. Historically, bear markets were synonymous with a sell-off; however, indicators now suggest a more stable financial terrain.
The market’s health also benefits from the purging of high-risk leverage. High funding rates previously led to substantial volatility, cleansing excessive risk-takers predominantly from long positions.
Key Observations
- •The average daily sale from veteran Bitcoin holders recently decreased from 2,350 BTC to 1,000 BTC.
- •Capital inflow continues to be positive, with a notable net ETF inflow of $22 billion.
- •Leverage balancing purged the market of high-risk positions, aiming for a more stable trading environment.
The market now needs a moderation of volatility to consolidate its position. Whether Bitcoin experiences a further dip or stabilizes at current levels remains to be seen. However, market indicators are presently positive with respect to stabilizing Bitcoin’s recent fluctuations.