According to Cointelegraph: Despite Bitcoin experiencing its heaviest drawdown in the current bull market, long-term holders continue to exhibit resilience. According to crypto analytics firm Glassnode, Bitcoin speculators are holding 2.8 million BTC amid significant unrealized losses, yet there is no sign of panic selling.
Glassnode Highlights Robust Bitcoin Market
In the latest edition of its weekly newsletter, The Week Onchain, Glassnode commended the robustness of the Bitcoin market. The firm noted that while the current price cycle is one of the worst performing, long-term holders remain unshaken. The current cycle, indexed to the date of the Bitcoin halving, shows heavy drawdowns despite reaching a new cyclical all-time high before the halving event in April.
Holder Behavior and Market Dynamics
Glassnode's analysis revealed that even as Bitcoin prices dipped to four-month lows of $53,500, long-term holders did not capitulate. Loss-taking events this week accounted for less than 36% of the total capital flows across the Bitcoin network. This is in stark contrast to major capitulation events like those in September 2019, March 2020, and May 2021, where losses accounted for more than 60% of capital flows.
Long-Term Holders: Defined as entities holding BTC for more than 155 days.
Short-Term Holders: Defined as entities holding BTC for less than 155 days, representing the more speculative investors.
Glassnode's chart showed a distinct lack of long-term holder participation in onchain selling at a loss during the recent price drawdown. This indicates a strong belief in Bitcoin's long-term value despite short-term price fluctuations.
Comparing Historical Cycles
The newsletter highlighted that, following 18 months of continuous price appreciation post-FTX implosion and three months of sideways trading, the market has endured its deepest correction of the cycle. Despite this, the current drawdowns remain favorable compared to historical cycles, suggesting a relatively robust underlying market structure.
Future Market Outlook
Short-term holders and day traders are now in focus as profit margins have flipped negative. At the $53,500 lows, short-term holders held nearly 2.8 million BTC, or 14.2% of the total supply, at an unrealized loss.
Miners are also causing concern with a hashrate capitulation phase ongoing, reminiscent of the events leading up to the bear market bottom in late 2022. Charles Edwards, founder of Capriole Investments, noted that a Hash Ribbon Capitulation signal fired in mid-May, indicating potential market bottom signals.
Conclusion
The steadfastness of long-term Bitcoin holders amid significant market drawdowns underscores their confidence in the digital asset's long-term value. As the market continues to digest excess supply and navigate through this correction phase, investor behavior will remain a critical factor in determining the trajectory of Bitcoin's price recovery.