Bitcoin’s price is becoming increasingly unpredictable. The asset has been trading in a tight range before a recent rally that saw it rise above $27,000 as investors hope for a happy ending to the Fed’s decision today.
One thing is clear though – the weak hands are selling. This is no reason to panic, because onchain data reveals that diamond hands, also known as long-term holders, are buying up more bitcoin. The sudden rally on Monday followed by a selloff reflects this reality.
According to Bitfinex analysts, such a trend is common and to be expected. “Current metrics depict short-term holders offloading their assets, with long-term holders capitalizing on the opportunity to buy in again,” they stated in a report. “Such time capitulation by short-term holders is typical of this cohort and it continues the trend of greater long-term holder accumulation,” the report further stated.
They also made reference to data from onchain analysis firm CryptoQuant, which shows that “the short-term holder cohort is currently at a deficit, leading them to relinquish the very coins they earlier bought from the long-term cohort.”
Long-Term Holders Accumulate
Despite the uncertainties surrounding Bitcoin’s price since the beginning of the year, one thing has remained clear, and that is the fact that long-term holders have been accumulating more Bitcoin. Data from several onchain analytics platforms like Glassnode have also confirmed that Bitcoin whales have held their assets for more than five years and are not willing to sell.
This was further confirmed by the massive movement of crypto assets off centralized exchanges in recent times. CryptoQuant analyst Adam Mourad also highlights onchain data that showed long-term holders are accumulating and moving assets off exchanges.
“Onchain outflow data shows bitcoin is tracing a strategic path chosen by certain investors to move their BTC away from exchange platforms, and recent observations following the price surge reveal that over 10,000 bitcoins have been transferred from exchanges to cold wallets,” Mourad told The Block.
The long-term holder accumulation trend could be because of their confidence in the future of Bitcoin. Investors are expecting no rate increase today Wednesday, as the Fed announces its decision on interest rates. If that happens, crypto assets could become more attractive to investors, causing more to enter the market.
Another factor could be the coming Bitcoin halving which is expected in 2024. This event has historically led to a rise in Bitcoin’s price, and investors are expecting a similar outcome following net year’s event.
What it Means for Bitcoin
With more investors buying and moving Bitcoin off exchanges for safe keeping, the asset is likely to experience a price surge in the future, despite the low volatility and price instability currently experienced.
This has been the trend in the past. With sellers outnumbering buyers, the price dips eventually, but with more buyers and long-term holders, the price is likely to go up eventually.
Interestingly, it isn’t just the number of holders that indicate a bright future for Bitcoin. Other key metrics such as Bitcoin mining difficulty also signal light at the end of the tunnel.
The mining difficulty – which is an indicator of miners’ interest in the asset – reached a record high few weeks ago, meaning miners have never been more interested in mining the asset than they are currently.
The post Bitcoin Suffers Short-Term Selloff, But Diamond Hands are Buying More first appeared on CryptocyNews.com.
from CryptocyNews.com https://www.cryptocynews.com/bitcoin-suffers-short-term-selloff-but-diamond-hands-are-buying-more/
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