Bitcoin’s high conviction holders are selling as price hits new lows
Bitcoin According to Compass Point, the highest conviction holders have joined the selloff in the cryptocurrency, and this could signal the beginning of the end of the ongoing crypto crash.
Long-term holders, defined as those who have held their coins for at least 155 days, or about five months, were largely inactive from February through April but have turned into sellers in recent weeks, Compass Point analyst Ed Engel said in a note on Tuesday.
Engel said that they sold approximately $2.4 billion worth of Bitcoin in the last two days and that this “had major impacts on BTC’s supply/demand balances.”
He also highlighted that 26% of Bitcoins sold in the last 30 days came from investors who bought it for over $90,000.
“This group of top buyers has been resilient throughout the bear market; however, they are finally capitulating as BTC approaches new cycle lows,” he added. “Capitulation of top buyers is a very common theme in recent bear markets. This gives us greater confidence that BTC’s bear market is in the advanced stages.”
Bitcoin is struggling to climb towards its October record above $126,000 as uncertainty over the US-Iran war keeps the price under pressure. But in the meantime, the stock market rose to new records. This divergence is causing investors to question both of Bitcoin’s dominant narratives: that it is “digital gold” that should benefit from geopolitical uncertainty, and that it trades like a high-beta tech stock.
Bitcoin ETFs on Tuesday recorded their 12th consecutive day and longest streak of net outflows ever, according to SoSoValue. Net assets in Bitcoin ETFs fell from $107.8 billion to $85 billion on May 14.
Following a fear-driven dump on Monday, Bitcoin is down 10% since the beginning of the week. Strategy The small sell-off of 32 coins triggered a long series of liquidations that accelerated the downward pressure.
Still, analysts say the Strategy’s sell-off is not a significant factor affecting Bitcoin price.
“ETF flows are the primary driver of BTC price appreciation, explaining approximately 45% of weekly return variation and are the best tool for tracking investor adoption/appetite,” Citi analyst Alex Saunders wrote in a note. he said. “Recent flows have been negative and the chances of passage of the US market structure bill – a potential catalyst for renewed investor interest in our view – are diminishing.”
“We expect sentiment to remain muted, particularly as the divergence in equity performance remains sharp, a lack of positive news on the regulatory front or fears of ‘fundamental trading’ around the fiscal position,” he added.
—CNBC’s Michael Bloom contributed reporting
