The king of cryptocurrencies finds itself in a precarious position as bitcoin languishes 13% below its all-time high of around $108,000, the deepest discount since the aftermath of the U.S. presidential election in early November. This persistent inability to reclaim lost ground has many investors wondering – is this merely another routine correction or the start of something more ominous?
Long-Term Holders Offload Over 1M BTC
On-chain data from Glassnode reveals that the primary culprits behind bitcoin’s recent price woes are the so-called long-term holders (LTHs) – seasoned investors who have clung to their BTC for at least 155 days. Historically, this cohort tends to accumulate during market downturns and offload their holdings into strength once prices rebound.
Since mid-September, LTHs have reduced their total holdings from around 14.2 million BTC to about 13.2 million, effectively dumping over 1 million bitcoin onto the market. Thursday alone saw them sell nearly 70,000 BTC, marking the fourth-largest daily sell-off this year.
Short-Term Holders Absorb the Selling Pressure
Of course, for every seller there must be a buyer. Enter the short-term holders (STHs), who have scooped up roughly 1.3 million BTC during the same timeframe. While they’ve managed to absorb the initial deluge of LTH selling, the past few days suggest that supply is starting to outpace demand, contributing to the dip to $94,500.
Bitcoin’s Supply Distribution Dynamics
To understand where the market might head next, it’s crucial to examine bitcoin’s overall supply distribution:
- Circulating Supply: 19.8 million BTC
- Exchange Balances: 2.8 million BTC (and falling)
- Long-Term Holders: 13.2 million BTC
- Short-Term Holders: Absorbed 1.3 million BTC since September
With exchange balances steadily declining by nearly 200,000 BTC in recent months, the onus falls on STHs to maintain their aggressive buying to offset the LTH selling. Any faltering of demand could open the door to a more pronounced price decline.
Long-term holders and short-term holders are the key cohorts to watch in the coming days to gauge the overall health of the bitcoin market.
– James Van Straten, Senior Analyst at CoinDesk
The Path Forward for Bitcoin’s Price
With bitcoin treading on increasingly fragile ground, the actions of LTHs and STHs will likely dictate the cryptocurrency’s near-term trajectory. A few potential scenarios could unfold:
- Demand Revival: STHs step up their buying, absorbing LTH selling and driving prices higher
- Supply Overwhelms: LTHs continue offloading while STH demand dwindles, pressuring prices lower
- Equilibrium Reached: Selling and buying reach a balance, allowing bitcoin to establish a new floor
Ultimately, the delicate dance between these two critical groups of market participants will determine whether bitcoin can shrug off its current malaise and reclaim its all-time high or if more pain lies ahead. As the world’s largest cryptocurrency stands at a crucial inflection point, all eyes are on the blockchain to see which force will prevail – supply or demand.
