Following the cycle low in November 2022, capital has progressively shifted towards the leading cryptocurrencies at the top of the digital asset risk curve.

Bitcoin, for one, has seen its dominance expand once again as a certain cohort of holders continued to support the growth. However, the same cannot be said for other crypto assets.

Bitcoin Strengthens Market Dominance

According to Glassnode’s latest report, Bitcoin’s dominance has surged from 38% in November 2022 to a remarkable 56% of the entire digital asset market today.

On the other hand, Ethereum, as the second-largest asset in the ecosystem, has experienced a 1.5% decrease in dominance, remaining largely unchanged over the last two years. Stablecoins and the broader altcoin sector have witnessed more significant declines of 9.9% and 5.9%, respectively.

Despite the recent market turbulence, long-term holders have consistently secured around $138 million in daily profits. Glassnode found that the $138 million in daily selling pressure from this particular cohort of Bitcoin investors likely reflects the amount of capital needed each day to absorb this supply and maintain stable prices.

Although market conditions have been volatile, the report said that “prices are generally flat over the last few months, suggesting a form of equilibrium is being reached.”

Interestingly, the supply held by long-term holders is currently rising rapidly, and data suggests that this trend highlights that HODLing behavior is far surpassing spending. However, it is the short-term holders who have faced the brunt of the losses during the recent downturn.

Short-Term Investors “Overreaction” Triggered Plunge

Bitcoin may have recovered to $60,000, but Glassnode said that its plunge of over 15% to a six-month low of $49,500 in the first week of August was triggered due to an “overreaction” by short-term holders. Currently, many such investors, defined as those holding BTC for less than 155 days, who bought during the 2024 rally are facing unrealized losses.

As such, the MVRV ratio for these investors has dropped below 1.0, indicating they are largely responsible for the losses following the market correction.

Meanwhile, the report further stated the hit taken to investor sentiment may not be as severe as it may seem at face value.