The greatest selling pressure occurs among traders who bought BTC between June and July 2019. Only 150,000 BTC in 11.46 million acquired at less than USD 8,000 moved in recent days.
Despite the massive sale of Bitcoin (BTC) that occurred in recent days due to a nearly 20% drop in price, the belief in the bull market remains unchanged among a large number of cryptocurrency holders, according to an analysis by Coin Metrics published on October 1st.
The study was conducted amid a significant decline that had been affecting the market for a week, when Bitcoin and almost all cryptocurrencies experienced declines, reaching minimum levels not seen since mid-June. Thus, without a clear catalyst, all major assets fell more than 20%. Such circumstance led to strong selling pressure among Bitcoin traders.
According to the Coin Metrics report, network data indicate that the increased crypto-asset-selling pressure originated in short-term traders, who acquired Bitcoin during the hike between June and July this year. In those months, prices ranged between USD 10,000 and almost USD 13,000. This group of traders bought BTC amid the bullish euphoria generated by the highs recorded so far in 2019.
In that sense, the analysis of the activity on the blockchain suggests that, by selling, these short-term holders only seek to protect their positions, even at a moderate loss.
A particularly large rotation was observed from the USD-10,000 cost basis container to the USD 8,000 cost basis container in recent weeks: about 500,000 bitcoins with a cost basis of USD 10,000 were sold and the USD 8,000 cost basis container increased by 750,000 bitcoins.
The Majority Does not Capitulate
Despite the above, the Coin Metrics team’s analysis adds that during the selling pressure, about 720,000 bitcoins remained inactive in the network. They explain that these crypto assets, with a cost basis of more than USD 13,000, belong to a cohort of BTC traders among whom capitulation almost did not occur.
Only 4,140 in these 720,000 BTC had moved in the previous days and did not contribute significantly to selling pressure, according to the report. The statistics show that these operators had become insensitive to a 20% drop in prices and are now firm long-term holders.
However, there is also a third group of traders who would have acquired about 11.46 million BTC at prices below USD 8,000. The analysis stated that these owners represent holders with a strong long-term conviction in Bitcoin. They highlight the fact that despite the extreme market movement, only 150,000 BTC in these 11.46 million moved on the chain.
Considering the data on movements in these last two groups, the Coin Metrics team concludes that most BTC holders have the view that the market is still in bullish trend remains, despite the recent decline in prices.
This optimistic view is shared in a report published by the digital asset research firm Delphi Digital, in which it showed the likely bullish and bearish market trends. There it is ensured that these lower prices represent the prelude to a stage of greater growth.
By Willmen Blanco