A recent Bitfinex Alpha report shows a shift in Bitcoin ownership. Short-term investments surge, driven by the popularity of spot Bitcoin ETFs, while long-term holders remain confident in the market.
Recently, there has been a notable change in Bitcoin (BTC) ownership in the crypto market, especially among short-term holders.
Short-term Bitcoin investors, meaning those typically holding Bitcoin for less than 155 days, have significantly increased their activity. Their combined holdings rose from 2.2 million BTC in January to more than 3.4 million BTC by mid-April — that’s nearly a 55% increase.
This rise is mainly linked to the increasing impact of spot Bitcoin ETFs.
Short-term vs. long-term holders
According to the report, the increase in short-term holders indicates a strong level of investment in BTC, driven by the launch and growing popularity of spot Bitcoin ETFs. The concentration of these brief asset holdings near the current market price indicates substantial investment activity at this particular price point. However, short-term holders also lead to vulnerability and price fluctuations, which can lead to potential risks or price drops.
This short-term holder number steadily rises due to new players entering the market and buying Bitcoin. However, the price stays the same because older coins are being distributed. The market is still resetting, and the $60,000-70,000 price point will be the new floor for BTC, much like $10,000 became a base in 2020.
— Thomas | heyapollo.com (@thomas_fahrer) June 12, 2024It looks like we still have overhang from last cycle.
Short term holders realized price is steadily rising as new players enter the market and Buy #Bitcoin. Hedge funds, Pension Funds, Banks etc.
But the price isn't taking off because older coins are being distributed.
The supply held by short-term holders currently stands at approximately 3.3 million BTC, a slight decrease from the mid-April peak. This decrease is due to the market correction in March that occurred after Bitcoin reached its all-time high.
Bullish sentiment for long-term BTC holders
On the other hand, long-term Bitcoin holders are demonstrating a remarkable show of confidence in the market. After Bitcoin achieved a new all-time high of $73,666 in March, many long-term holders sold significant amounts of their BTC.
Recent data shows that the trend of selling Bitcoin has stopped, and instead, long-term holders are now starting to accumulate Bitcoin. The amount of Bitcoin held by investors for over a year has remained almost unchanged, indicating that these investments are being held onto rather than being actively traded.
— Kyledoops (@kyledoops) June 11, 2024STH hit breakeven with the latest $BTC dip, marking a potential reaction zone.
The reaction's intensity is unclear, but long-term holders can hold steady.
Analyzing Bitcoin and STH together hints at a short-term bottom likely forming this week. pic.twitter.com/IVgTHcWBOZ
Furthermore, just about 0.03 % of the supply held by long-term investors comprises coins that were bought at prices higher than the current spot price. In the initial stages of a bull market, it’s common to see long-term investors holding onto their profitable positions.
Bitcoin whales are also accumulating Bitcoin at a pace reminiscent of the pre-2020 bull run, leading to a new historical high in their Bitcoin balance.