BTC Still Susceptible to Price Corrections
Since the SEC approved spot Bitcoin ETFs, BTC has experienced selling pressure from short-term holders looking to take profits. In the latest Bitfinex Report, analysts warned that BTC is still vulnerable to price corrections as these holders continue to sell.
Bitcoin Prone to Pull-backs
Following the ETF approval, Bitcoin surged past $49,000 but quickly dropped by 15% within 48 hours. Bitfinex attributed this plunge to heavy spot selling and increased volatility. Short-term holders were eager to profit from their average realized buy-in price of around $38,000, moving $2.2 billion worth of BTC to exchanges.
On the other hand, long-term holders showed minimal activity during this period, indicating strong holding sentiment. Around 70% of Bitcoin’s total supply has remained unmoved for over a year.
Bitfinex believes that although the sell-off may have cooled down, the market is still susceptible to corrections and pull-backs, as predicted in their 2024 outlook report.
Increasing Capital Inflows
Despite the selling pressure from short-term holders, there has been an increase in capital inflows into the market. Dollar-denominated stablecoins on exchanges have risen from $18 billion to $20 billion since the beginning of the year.
This growth in stablecoin supply indicates investor confidence and typically leads to increased buying of crypto assets. Investors are expected to leverage this liquidity to purchase BTC, which could positively impact its price.
Therefore, a spike in stablecoins being minted or moved to exchanges is seen as a bullish sign as major entities prepare for significant purchases.
Hot Take: Bitcoin’s Short-Term Volatility
While Bitcoin has experienced short-term volatility due to selling pressure from short-term holders, the long-term outlook for the leading digital asset remains positive. The behavior of long-term holders will play a crucial role in determining Bitcoin’s future. Despite potential corrections and pull-backs, the market is still favorable for BTC. As stablecoin balances increase and investors gain confidence, there is a potential for a positive impact on Bitcoin’s price. Therefore, it is important to monitor both short-term and long-term trends to make informed investment decisions.
Owen Patter is a distinguished crypto analyst, accomplished researcher, and skilled editor, leaving a notable imprint on the cryptocurrency landscape. As a proficient crypto analyst and researcher, Owen delves into the intricate realms of digital assets, offering insights that resonate with a diverse audience. His analytical acuity is harmoniously paired with adept editorial skills, allowing him to transform complex crypto information into easily comprehensible content.