Low Dormant Bitcoin Levels Raise Concerns
Despite market enthusiasm, the amount of Bitcoin lying dormant in digital wallets is hovering at low levels. This could be a potential warning sign for the cryptocurrency as spikes in dormant Bitcoin usually precede rallies. When dormant Bitcoin is not being sold, it effectively results in a lower circulating supply. Long-term investors have likely decided to take profit amid ongoing market enthusiasm.
Dormancy Levels Reach Record Lows
Data from blockchain analytics firm Glassnode reveals that only 1,832 BTC have gone without spending over the past two years, down sharply from over 30,000 in late December. Such low dormancy levels for the world’s largest cryptocurrency frequently precede major price swings. When dormancy runs high, it suggests Bitcoin holders believe they’re better off doing nothing with their stash. Low dormancy levels indicate more holders are on the move, possibly to sell or trade. The number of Bitcoins lying untouched for five years has also declined, from almost 16,400 in December to around 300.
Social Media Buzz and Spot ETF Approval
Bitcoin is currently trending on social media, responsible for 3.5% of all detected crypto-related posts according to Santiment. The trend is mostly driven by anticipation of the approval of a spot Bitcoin exchange-traded fund by the United States Securities and Exchange Commission (SEC). Many long-term holders see this as an opportunity to sell high.
Hot Take: Potential Impact on Bitcoin Price
The low dormant Bitcoin levels coupled with increased social media buzz and the prospect of a spot ETF approval raise concerns about the future price of Bitcoin. Historically, spikes in dormant Bitcoin have preceded major price rallies. With more holders on the move and potentially selling or trading their Bitcoins, there could be a shift in supply and demand dynamics. Additionally, the approval of a spot ETF could lead to increased selling pressure from long-term holders. These factors combined create an uncertain outlook for Bitcoin’s price in the near future.
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