Ms. Kim Chua, a "senior" analyst of PrimeXBT recently shared many comments around the growth and decline of the cryptocurrency market.
In the face of the recent sharp drop in the Bitcoin price, many experts' opinions are expressed in two main groups: the Bulls and the Bears. Each group has its own argument and is quite convincing. This confused global crypto investors and traders.
The only way out of the confusion is to analyze the data, numbers never never lie. The data shows that this appears to be just a mid-cycle correction in Bitcoin, not the end of an uptrend in the market.
During the recent sharp drop, the majority of Bitcoin sellers were new investors to the market. Specifically, the number of BTC just bought within a week to a month was sold the most. This group of sellers accounted for about 13% of all BTC sellers during the sell-off week.
Reports also indicate that the week BTC price started to drop below $35,000, whales holding between 10,000 and 100,000 BTC bought a large amount of assets amounting to 122,588 BTC, collecting most of the Bitcoin sold by group of market participants hoping to make a quick profit.
These buyers are veteran traders who have never sold their BTC in at least 3 years. This shows that the BTC supply is being shifted from the novice, less experienced group to the seasoned group.
Examining the BTC reserves of the mining pool, we see that this group of people also did not participate in the sell-off. This group even accumulated more assets as their reserves increased during this time period.
Since the market sell-off, the amount of BTC held by long-term BTC investors has increased, while the amount of BTC held by short-term speculators has decreased. With long-term investors returning to collecting and accumulating, it is a good sign for BTC price as such a supply distribution is not usually a sign that the market has peaked.
At the peak of the market, long-term investors will sharply reduce the supply, while the new group will be the accumulator. But in the most recent sell-off, the opposite happened. Long-term investors are accumulating more, while new traders are knocked out of the game.
Looking at the chart above, we can see that as 2017's bull market ended, long-term investors sold aggressively. However, this group of investors is currently in accumulation mode.
From 2017 to now, an additional 2.4 million BTC, or 8% of the circulating supply, has been acquired by the group of longtime investors. This pool holds 58% of the circulating supply of BTC, which means the supply crunch will mount even higher in the future as they will continue to buy more.
After analyzing various metrics, it can be seen that the market rally is not over yet. In fact, we may be moving into the next bullish phase of the parabolic cycle as the accumulation of long-term investors will intensify the BTC supply crunch.
This supply crunch is likely to go unnoticed until the period in which the circulating supply has decreased to levels that are hard to see before.
More and more institutional investors are showing interest in accumulating BTC and other cryptocurrencies. Typically, recently, "Wolf of Wall Street" Carl Icahn announced that he will invest up to 1.5 billion USD in the cryptocurrency market.
As a result, most of the BTC supply will be removed from circulation by these large institutions, and very little [BTC] will be left for the average investor.
With short-term speculators now no longer owning much BTC, the pressure on the price will be less as speculators have no BTC left to sell while long-term investors are accumulating rather than selling.
We will even have the opportunity to see the same group of short-term players return to the market in a FOMO fashion to chase BTC price when the asset returns above $45,000, and more when BTC returns to all-time highs. at about $64,000.
When Bitcoin rises to $64,000, I expect their value to rapidly increase parabolic. This could take the BTC price to $100,000 or more.
After that, the next big drop is likely to come again.
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