Highlights:
- Most Bitcoin is dormant for six months, showing strong investor confidence.
- Short-term holders are underwater and may sell, adding pressure on BTC.
- Bitcoin faces resistance but remains bullish due to strong investor confidence.
Recent on-chain data reveals that despite a 21% drop from its all-time high, most Bitcoin (BTC) in circulation has remained dormant for at least six months, providing insights into investor holding behavior over time.
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Glassnode’s Hodl Wave chart shows that about 75% of Bitcoin has been inactive for the past six months or longer. This is a notable rise from a week ago, when around 45% of Bitcoin had been dormant for at least six months. The high percentage of dormant Bitcoin indicates a strong trend of holding among investors, reflecting their confidence in Bitcoin’s future value.
Impact of Long-Term Holding on Bitcoin Market and Challenges for Short-Term Holders
Holding Bitcoin for extended periods could significantly impact the market. As long-term investors hold more Bitcoin, the supply available for trading decreases. This reduced supply, coupled with steady or rising demand, could potentially drive up Bitcoin’s price in the future.
In contrast, short-term holders who have held Bitcoin for less than 155 days are facing a different situation. On-chain analyst James Check observed that over 80% of short-term holders are currently underwater, having bought Bitcoin at prices higher than its current market value. This group of investors is especially prone to panic selling, which could lead to additional downward pressure on BTC. Check said, “This is similar to 2018, 2019, and mid-2021, which signaled many investors were at risk of panicking and precipitating a bearish trend.”
Right now, over 80% of #Bitcoin Short-Term Holders are underwater, meaning their coin was acquired at a price above the current spot price.
This is similar to 2018, 2019, and mid-2021 which signalled many investors were at risk of panicking, and precipitating a bearish trend. pic.twitter.com/8jM7PBqh5z
— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) August 19, 2024
Bitcoin Faces Resistance Amid Market Uncertainty
According to CoinMarketCap, Bitcoin’s price has dropped over 10% in the past month. Despite this, it has risen 12% over the last six months. BTC is currently around $58,000, having lost the $60,000 level.
The recent pullback has prompted mixed reactions from investors and analysts. Some view it as a natural pause in the long-term uptrend. Others, however, remain cautious about the short-term outlook. Despite this, investors have held around 75% of BTC supply for over six months. This “hodgepodge” behavior is typically considered bullish, indicating strong investor confidence in Bitcoin’s future. BTC’s difficulty breaking resistance levels is attributed to various market factors.
Analysts note that Bitcoin faces strong resistance near its all-time high with selling pressure at key levels. However, some analysts see this as a buying opportunity and predict BTC could reach $73,000 by year-end. In addition to the optimistic outlook, several factors are boosting optimism about Bitcoin’s future. These include increasing institutional acceptance, the 2024 halving event, and a macroeconomic environment that may make BTC an attractive alternative to traditional investments.
Some analysts believe Bitcoin could surpass its all-time high and rival gold, strengthening its role as “digital gold.” In the short term, Bitcoin’s market dominance is strong despite bullish trends in other assets like Solana. Popular analyst Rekt Capital noted that Bitcoin is 125 days away from the halving event. Historically, Bitcoin’s parabolic rally starts 160 days after the halving, so a price breakout could occur around the end of September.
Bitcoin is ~125 days after the Halving
Bitcoin tends to breakout into the Parabolic Phase of the cycle some ~160 days after the Halving
If history repeats, Bitcoin could be just over a month away from breakout
That's late September$BTC #Crypto #Bitcoin pic.twitter.com/iy7xmDjuso
— Rekt Capital (@rektcapital) August 18, 2024
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