A bitcoin accumulation uptrend could result in a BTC price ‘double pump' similar to that seen in 2013

 Long-term planning The current sell-off hasn't deterred Bitcoin investors, but there is one worrying indicator.

Bitcoin is on track to have its second-largest monthly drop ever

According to Glassnode data, the recent drop in Bitcoin's (BTC) price from around $65,000 to as low as $30,000 did not compel long-term holders to sell.

Just as BTC/USD bids were plummeting, the on-chain analytics platform reported a rise in Bitcoin reserves stored in wallets with lower unspent output.

Meanwhile, the data suggests that miners — the businesses that create and supply newly minted cryptocurrencies for retail markets — are on a Bitcoin buying binge. As a result, in recent sessions, the active BTC supply has started to decline.

During the BTC/USD rate decrease, short-term Bitcoin holders — those who hold the flagship cryptocurrency for less than a week after purchasing it — were the biggest sellers. According to Glassnode statistics, fresh market entrants panic-sold BTC during the May collapse, when the cryptocurrency dropped 38% of its value from its all-time high.

In the meantime, Bitcoin price volatility continues to take advantage of short-term traders with double-digit percentage up/down movement. On TradingView, the 24-hour Bitcoin Volatility Index closed around 19.70 on May 20 after bottoming out at 1.90 on April 2 — a 936 percent increase during the period, during which BTC/USD climbed to an all-time high of $65,000 and then corrected lower to $30,000.

Increased price fluctuations were a hint that investors were still worried or unsure about Bitcoin's upcoming market trend. In the chart above, the intraday candles indicated persistently increasing volatility, with the one on Sunday closing 34% lower than the previous session. However, the overall trend appeared to be heading downward.

There is, however, one snag.

Long-term investors, according to Glassnode, will see their earnings or losses at some point in the future (PnL). The analytics portal referenced a proprietary index that monitors long-term holders' exhaustion levels — the point at which their ability to retain BTC deteriorates, prompting them to realize their market gain or losses.

Also read: Bitcoin's worst month in ten years: 5 things to keep an eye on

“The current level of net unrealized PnL held by LTHs tests the 0.75 level, which has historically been the tipping point between bull and bear cycles,” Glassnode analysts stated.

This statistic only recovered in the 2013 ‘double pump' situation. Should LTHs' paper gains continue to decline, a new source of overhead supply may emerge. Higher prices and a supply squeeze from purchasing the drop, on the other hand, would start to resemble the ‘double pump' scenario from 2013.”

In terms of macroeconomics, Bitcoin is optimistic.

The United States' trillion-dollar deficits are the sole thing that distinguishes the present Bitcoin holding scenario from past ones. The debt-to-GDP ratio in the world's largest economy has risen to its greatest level since World War II. President Joe Biden revealed a new $6 trillion spending plan for 2022 on Friday.

By 2031, the plan would increase annual government spending to $8.2 trillion. Annual budget deficits of over $1.3 trillion and $1.8 trillion in 2022 would result.

One of the market's major concerns is that greater government expenditure will result in a sharp increase in inflation.

Also read: Bitcoin is on track to have its second-largest monthly drop ever

Institutional investors have flocked to Bitcoin because of its anti-inflation story. Supporters point out that only 21 million BTC tokens are available, making it an excellent store of value as comparison to the infinitely printing US dollar.

Bitcoin has been introduced to the balance sheets of companies such as Tesla, Square, MicroStrategy, and Ruffer Investments as a cash alternative. Billionaire investors such as Stan Druckenmiller, Paul Tudor Jones, and Mike Novogratz have made Bitcoin a significant part of their investment portfolio.

Fundamentals continue to provide a supportive backstop for Bitcoin.

“Bitcoin was built for this moment,” said Dan Held, Kraken's director of growth marketing. “We're in the midst of the world's largest money printing operation, and Bitcoin is the only way out.”

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