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Are Long-Term Holders Selling The Bitcoin Price Top?

Long-term bitcoin holders typically stack sats in bear markets and then sell some for profit at the local price top.

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

One of the most common patterns in bitcoin’s on-chain history is that of the long-term holders stacking sats during bear markets and then selling some of their positions for profit-taking near the tops of bull markets. Right now, long-term holder supply is hitting new all-time highs as we brace for bitcoin’s next bull move up.

We last covered long-term holder supply profit dynamics in The Daily Dive #078. The definitions of Glassnode’s long-term holders and short-term holders can be found here.

As new demand enters the market in the later stage of the bull cycle, long-term holders sell bitcoin to new market entrants, i.e., short-term holders, until the market selling and buying is exhausted. This typically signals the local market price top as new demand is eager to buy at any price. Price then cools off and long-term holders start accumulating again.

Source: Glassnode

Over the summer, as the bitcoin price fell over 50%, bitcoin entered a mini-bear-market-type environment where long-term holders took the opportunity to stack supply at a rate that we haven’t seen happen before during a bull cycle.

This behavior propelled the long-term holder supply to new all-time highs as long-term holders now anticipate higher prices expecting new retail, institution and futures ETF demand to come into the market. Now, we’re still seeing long-term holders add to their holdings, but at a slightly decelerating rate compared to earlier in the summer

Source: Glassnode

How The Bitcoin Market Reacted To Federal Reserve Comments On Ongoing Inflation

The bitcoin market reacted to comments by Federal Reserve Chairman Jerome Powell about the rising risk of persistently high inflation. The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox,::Listen

The bitcoin market reacted to comments by Federal Reserve Chairman Jerome Powell about the rising risk of persistently high inflation.

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

In the Daily Dive #102, we highlighted the rising DXY (U.S. Dollar Currency Index) in 2021 and the negative impact it can have on bitcoin’s price. Today, with Federal Reserve Board Chair, Jerome Powell, talking about the rising risk of persistently high inflation in the United States and a potential accelerated taper, DXY, SPX and bitcoin markets immediately reacted. The DXY jumped over 1% with both the S&P 500 Index and bitcoin falling in tandem.

The $DXY and $SPX react to Powell’s comments regarding inflation and tapering.
The bitcoin market fell following Powell’s comments.

Over the last few days, we’re seeing rising and elevated market volatility as well with the VIX spiking over 54% last Friday, which is the fourth largest one-day percentage increase in its history. This is a cautious sign for investors to expect volatility in the near term.

$VIX saw one of its largest increases in history.
Source: Charlie Bilello, Compound

The Federal Reserve’s position is an incredibly difficult one: the choice between saving the bond market or sustaining the U.S. economy. An accelerated taper brings us closer to interest rate hikes which are the only way to help fixed-income investors saddled with real negative yielding U.S. debt, as inflation runs hot over 6%.

On the other hand, expectations of accelerated tapering with plans for interest rate hikes will drive down asset prices as extra liquidity in the system winds down and the cost of capital increases, negatively affecting current equity valuations. The SPX fell 1% in 15 minutes on yesterday’s announcement.

Are Long-Term Holders Selling The Bitcoin Price Top?

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