Who is panicking as Bitcoin plummets?
As the price of Bitcoin ($BTC) fell below the key support of $60,000, a wave of panic selling began in the market. Bitcoin fell below $55,000 this morning, and was $54,358 at the time of writing.
Image source: TradingView
And behind this wave of selling, who is selling? On-chain data provided by CryptoQuant shows that most of this sell-off came from novice investors who had just entered the market this year. They were forced out of the market during this "horizontal summer" and fled with losses.
Institutional data: Novices flee at a loss
According to CryptoQuant’s chart, new investors have sprung up since the launch of the Bitcoin spot ETF in January, but these investors are not solid long-term holders.
Analyst Cauê Oliveira pointed out on Thursday that Bitcoin worth about $2.4 billion and held for only three to six months was transferred and sold in large quantities during the price decline. This type of Bitcoin activity has increased in recent years. When the market plummeted, it even surged significantly.
Cauê Oliveira said that these entities who bought because of the passage of the Bitcoin spot ETF may be classified as "long-term" holders, but in fact behave more like short-term investors because they only entered the market at the beginning of this year. of.
He believes that these investors are likely to buy Bitcoin spot ETFs for "hype purposes." However, after the listing, although the price of Bitcoin once broke through a new high, it did not soar as expected. The price has fallen back to a point where it is basically flat or even lower than the cost price, which makes short-term investors panic.
According to data from LookIntoBitcoin, the realized price for short-term Bitcoin holders is currently $64,614, approximately 10% higher than the current market price.
An old hand is as steady as an old dog
In contrast, according to Cauê Oliveira's observation, entities that have been held for more than a year have not yet shown signs of large-scale selling. This proves that veterans have been baptized by many market fluctuations and are facing economic downturns. Still confident enough: "Long-term holders are still as stable as Mount Tai and will not easily change their strategies due to short-term market fluctuations."
Although the price of Bitcoin has been trading sideways and even downward since March, its price has not retreated more than 20% from its all-time high of $73,400, Cauê Oliveira’s comparison with past cyclical bull markets. In comparison, Bitcoin has shown amazing stability in this round.
However, given the recent panic selling, Axel Adler Jr., another analyst at CryptoQuant, believes that the next key support for Bitcoin may be much lower than the current price, somewhere around $47,000.
Axel Adler Jr. pointed out that the price of $47,000 is 25% lower than the average purchase price of short-term holders, which will become a good support level and an important shock point for the market to shake off new buyers in the correction: "Before The organic adjustment in the bull market lasts for 110 to 160 days. It remains to be seen whether the market will experience a similar adjustment again this time.”
Overall, the Bitcoin market is currently in a delicate stage. Novice investors are panicking due to price fluctuations, while veteran investors continue to remain stable. Future market trends will depend on more market parameters, but what is certain is Yes, as the investor group gradually matures, the stability of the Bitcoin market will gradually improve.
