According to Glassnode analysts, the clear trend of selling pressure has not completely disappeared, while noting that on-chain conditions indicate strong conviction from Bitcoin holders.
Bitcoin fell below $58,000 on Thursday afternoon.
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Posted on August 15, 2024 at 9:03 p.m. EST.
Volatility took over digital asset markets on Thursday, with several major cryptocurrencies experiencing sudden and sharp declines. Bitcoin’s price fell to $57,500, down 3% in an hour. The broader cryptocurrency market saw a 2.24% decline in the past 24 hours, to $2.04 trillion.
The last time bitcoin hit this price level, global stock markets were also deep in the red. The S&P 500 ended down 3% after posting its biggest single-day loss since 2022, with the end of the yen carry trade and fears of a U.S. recession likely causing widespread market panic on August 5.
Stock markets around the world were in much better shape Thursday, with Wall Street indexes ending higher after retail sales data beat expectations. However, digital asset markets did not react in the same way to the economic data.
While there is no clear catalyst for the selloff, market participants are wary of a potentially large bitcoin sale by the U.S. government. A U.S. government-linked wallet transferred 10,000 BTC seized from Silk Road to a Coinbase Prime wallet earlier this week, according to data of Arkham.
Bitcoin Miner reserves are also at their lowest level in three years, suggesting that bitcoin mining companies may be selling their holdings as they see thinner profit margins amid surging network hash rates.
Onchain Analysts at Glassnode find There is a steady regime of sell-side pressure in digital asset markets. Analysts have pointed to the cumulative volume delta, which measures the net difference between buying and selling volumes over a given period, which has fluctuated between -$22 million and -$50 million over the past two years.
“Activity in the cash markets shows that there has been a clear trend of selling pressure recently, and this has not yet completely disappeared,” the analysts said.
Despite the selling pressure, wealth held by long-term bitcoin investors remains historically high compared to other periods when there have been all-time high breaks, suggesting to analysts that “there is a degree of patience among investors and they are waiting for higher prices.”
“The absence of panic selling among this cohort, replacing the sharpest price contraction of the cycle, highlights the resilience of their overall conviction,” the analysts said.
August 16, 6:32 a.m. ET: Two additional paragraphs have been added at the end of the article to provide context on the strong conviction of Bitcoin holders.
