The selling pressure at this time emphasizes how whales and long-term holdings impact Bitcoin market dynamics.
There was a noticeable change in the cryptocurrency market’s characteristics last week. Bitcoin (BTC) saw a decline of more than 6% in value, and hundreds of millions of dollars were taken out of U.S. spot Bitcoin exchange-traded funds (ETFs), ending a 20-day trend of inflows.
The most recent report from Bitfinex Alpha stated that the selling of Bitcoin by whales, miners, and long-term holders on exchanges and through over-the-counter transactions was the primary reason for the currency’s decline.
Selling under pressure from whales and LTHs
During bull markets, long-term investors often sell their holdings gradually, especially during periods of market consolidation like the current one. Most of the selling pressure last week came from this investor demographic, which greatly outperformed spot ETFs.
The Holders Net Position Change indicator, which monitors long-term Bitcoin investors’ monthly position adjustments, shows how strong the selling pressure is. When long-term investors sell, this statistic turns negative; when they buy, it turns positive. The pointer has been persistently negative for the final nine days.
In addition to long-term holdings, whales have been very active. The percentage of total flows to the top ten exchanges has increased, indicating that a significant amount of Bitcoin is being held on trading platforms via whale wallets, possibly in anticipation of a sale.
Although the volume of sales in the cryptocurrency market is lower than the volumes seen in April, Bitfinex analysts said it nevertheless emphasizes the influence of long-term holders on BTC market dynamics. It also serves as a reminder that, compared to spot ETFs, long-term holders and whales still make up the largest portion of Bitcoin holdings. During decisive phases of the market, the choices of these investors can have an impact on price movements and liquidity.
Depletion of minor reserves
In addition, miner Bitcoin reserves dropped precipitously last week after declining steadily since before the halving of Bitcoin.
“The peak in BTC around March 2024 corresponds with a significant decline in miner reserves, implying that miners were selling off their reserves to take advantage of high prices.”This was usual at the time, as miners were selling reserves to prepare for the Bitcoin halving and to raise funds to modernize machinery and operations,” Bitfinex claimed.
Analysts speculate that, despite the reduction in block rewards, miners are still having difficulty operating efficiently. Their reserves have fallen to a four-year low, and they are part of the selling pressure that is currently present.
