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Nearly all Bitcoin long-term holders have returned to profitability this week as the premier digital currency surged past $50,000 on Monday for the first time since December 2021.
This comes despite a significant market decline last month following the introduction of several Bitcoin spot ETFs, which many analysts described as a “sell the news” scenario. Indeed, on-chain analysis indicates that the price drop resembled “a classic bull market correction,” according to Glassnode’s market analysis newsletter from February 14.
Bitcoin Long-Term Holders Liquidate
“The market experienced a notable increase in speculation leading up to the spot ETF approvals in January,” Glassnode noted. “Consequently, many Long-Term Holders (LTH) moved their coins, either to realize profits or possibly to rebalance their portfolios into one of the newly launched ETF products.”
In November, the amount of Bitcoin held by “long-term holders” reached a record high of 14.996M BTC – approximately 76% of the circulating BTC supply. This includes any BTC that has remained unmoved for at least 155 days.
#BITCOIN’S LONG-TERM BULL RUN.
Halving is approaching.
For investors. pic.twitter.com/TnCMjE1TgV
— AO (@AurelienOhayon) February 6, 2024
This number has decreased by about 299,500 BTC over the past three months. Glassnode attributes this decline to a combination of long-term holders finally utilizing their coins and the significant outflows from the Grayscale Bitcoin Trust (GBTC) since its conversion into an ETF last month.
As of January 13, Grayscale has experienced continuous outflows post-launch totaling 156,327 BTC valued at $6.5 billion.
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Nonetheless, over $10 billion has flowed into newer Bitcoin ETFs launched by BlackRock, Fidelity, and others, which have helped mitigate the selling pressure, pushing BTC to $52,000 on Wednesday.
Is Grayscale’s Selling Concluded?
At present prices, Glassnode reported that less than 13% of the total supply is still at a loss, representing long-term holders who purchased during the peak of the 2021 bull market.
For short-term holders, approximately 50% of investors faced losses during last month’s decline to $38,000. Glassnode asserts that this was more of a “garden variety” correction, indicating that Bitcoin’s price is not in jeopardy of significant downturns.
“During strong and resilient uptrends, these points of balanced STH supply profitability typically establish support,” Glassnode clarified.
The worst of Grayscale’s selloff seems to have subsided, with the firm reporting outflows of less than $100 million for five of the last six trading days. Meanwhile, net inflows to ETFs have exceeded $400 million over the last four trading days, reaching over $630 million on Wednesday alone.
Trading volume for BlackRock’s ETF also appears to be surpassing Grayscale, with the fund averaging $760 million in daily volume this week.
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