Bitcoin fund holdings have fallen to their lowest level in more than two years. The liquid supply of the currency has also decreased as short traders exit the spot market.
The number of Bitcoins held in BTC Fund Holdings has fallen to its lowest level in thirty months, a pseudonymous analyst at CryptoQuant Chained noted in a recent report.
The BTC Fund Holdings metric tracks the total amount of major coins held in the form of investment vehicles such as trusts, exchange-traded funds (ETFs), and funds. The cumulative amount of coins held in these holdings may grow alongside the growing interest in indirect investing.
According to data tracked by CryptoQuant, as of September 8, this metric was 684,435 BTC. Year-to-date (YTD), the metric has seen a 1% decline in value.
While noting that the prolonged drop in fund holdings could be due to several reasons, Onchained added that “it may signify a deeper change in investor sentiment or strategy.”
The analyst added that the sharp decline in fund holdings over the past year overall reflects a cautious sentiment among investors and institutions, possibly due to regulations and concerns about market volatility.
Additionally, it can result from profit-taking or portfolio adjustments, highlighting the dynamic nature of the cryptocurrency market.
A change in the investment behavior of this group of investors can have a major impact on the price of BTC because they control a large portion of the coin’s supply.
“This development highlights the pivotal role of institutional investors, trusts, ETFs, and funds in influencing Bitcoin’s market dynamics. Their actions can have a considerable impact on Bitcoin’s price and market stability, reinforcing the earlier understanding of their significance,” the analyst remarked.
Short-Term Holders Run for Their Lives as Liquid Supply Plummets
As BTC continues to face strong price resistance at $26,000, the coin’s liquid supply has fallen to a low of 4,120,775 BTC, Onchained discovered.
According to the CryptoQuant analyst, this metric tracks the portion of the circulating supply of BTC that is available for trading in the market. It is mainly in the hands of short-term investors who are willing to sell their coins quickly if the price drops.
When the liquid supply of BTC is reduced in this way, price volatility often results. This is because there are fewer sellers available to sell their coins if the price rises and there are fewer buyers available to imitate if the price falls. This can cause strong price movements, both up and down.
Bitcoin Price Performance in September: A Preview
Bitcoin price performance continues slowly, with the asset failing to produce significant moves in either direction. September has not been the most exciting month in terms of BTC price performance, at least for now. The asset started the month with a drop to an 11-week low of $25,350, which followed rising over $28,000 after the Grayscale win.
Since then, Bitcoin has only managed to recover about $500 and remained still for a week until Thursday. At that point, the bulls took charge and pushed BTC north by several hundred dollars, culminating in a weekly high of $26,400.
However, as has been the case with all other recent price surges, this one was short-lived and the cryptocurrency lost all momentum almost immediately. It has been stuck below $26,000 since then, and the last 24 hours have not changed that.
Its market capitalization has remained above $500 billion, while its dominance over alts has increased slightly to 48.5%.
By Leonardo Pérez
