HODLers emerge the secret hand in deciding Bitcoin’s next move


MUMBAI: The heated debate among cryptocurrency investors after the shock and awe crash of the past two weeks is whether this is the start of a sustained bear market in Bitcoin or just removing the foam created by leverage-based trading.

After hitting an all-time high of $ 64,863.10 on April 14, Bitcoin has now given up 50 percent of its profits in losses with virtually every buyer of the cryptocurrency since February. After the dramatic crash that saw the cryptocurrency drop to nearly $ 30,000, the currency has been hovering around a range of $ 9,000 for the past few days, suggesting that the market is still gaining a foothold after the sell-off .

The sell-off of Bitcoin and other cryptocurrencies in late May was largely due to China’s regulatory actions against cryptocurrency businesses and miners, which resulted in the liquidation of lever-based positions in the market taken by short-term holders of the coin.

According to Bybt.com, 887,000 trading accounts were liquidated on May 20 alone, reflecting the sheer amount of losses to investors. Currently, around 26 percent of Bitcoin supply from short-term traders (less than 155 days) is underwater after the crash, according to Glassnode.

Interestingly, long-term Bitcoin holders, defined as those who have held their coin for more than 155 days, haven’t panicked the past two weeks when it crashed.

“Overall, the LTHs have accumulated again. This suggests that early bull market buyers (prices below $ 30,000) have reached reasonable supply volume. If this trend continues, this could indicate that a longer-term supply bottleneck is in play, ”said Glassnode in its newsletter published on Monday.

At the same time, Bitcoin miners have started accumulating their coins during the crash. Given that two major players in the market are showing a tendency for cryptocurrency to accumulate after such a rapid decline, it should instill confidence among investors.

However, the fact remains that for short-term coin holders who are deep in the red and holding their coins, the longer Bitcoin price stays closer to the $ 30,000 mark, the more difficult it becomes. Hence, most of the selling pressure will come from this lot as you will likely use any bounce to sell.

What will determine the fate of the Bitcoin market is what the long-term holders of the coin they bought in December and January will do. These coin holders are still chargeable as the price fluctuates around the 155-day threshold.

“LTHs, on the other hand, remain largely profitable, but are approaching the NUPL (Net Unrealized Profit or Loss) threshold of 0.75. In previous cycles, this has signaled the onset of more bearish trends as LTHs tend to capture remaining unrealized gains, ”noted Glassnode.

For now, therefore, it is likely that the Bitcoin market will go nowhere until either the long-term owners or the short-term sellers assert their dominance in this tug of war.