Bitcoin Investors Shift Towards Long-Term Holding
According to the latest Bitfinex Alpha Report, there has been a significant change in investor dynamics in the Bitcoin market. The report reveals that long-term holders (LTHs) have increased their supply by more than one million BTC since April 13, 2023, while short-term holders (STHs) have reduced their supply by nearly one million BTC during the same period.
Understanding Investor Categories
Bitfinex analysts define STHs as investors who hold BTC for less than 155 days and LTHs as those who hold it for 155 days or more. It is observed that STHs decreased their holdings, while LTHs increased theirs. On a specific occasion between September 25 and 26, STHs reduced their supply by 200,000 BTC, whereas LTHs increased their holdings by the same amount.
This behavior is common among STHs who sell their holdings to make profits or limit losses. On the other hand, LTHs tend to increase their holdings due to their belief in Bitcoin’s long-term potential.
Shift in Supply Dynamics
The shift in investor dynamics has led to an all-time high supply from LTHs, while STH supply has reached levels not seen in approximately eight years. In recent weeks, this gap has widened further as many STHs liquidated their spot positions and realized small profits when Bitcoin spiked to $28,500 at the start of the month.
Heightened Volatility Expected in October
Last week, Bitfinex highlighted that various market indicators indicated multiple investor cohorts entering a HODL phase in anticipation of a potential bull run. However, the exchange predicts that Bitcoin will experience increased volatility in October. The cryptocurrency began the month with a significant 24-hour volatility increase of over 340% on October 2.
“With volatility spilling over from the US stock market to Bitcoin and other crypto assets, we currently see isolated high volatility events continue to rise, and with historical volatility sustaining above crucial averages, this trend is likely to continue. Additionally, the options market is currently pricing in more volatility for BTC as in the past,” Bitfinex analysts said.
Interestingly, Bitcoin appears to have decoupled from major US indices. Its price reached the bottom of its current range before the S&P 500, which recently rebounded from the 4200 points level.
Hot Take: Bitcoin Investors Shift Towards Long-Term Holding Amidst Heightened Volatility
The latest data from Bitfinex shows a clear shift in investor dynamics in the Bitcoin market. Long-term holders are increasing their holdings, while short-term holders are reducing their supply. This behavior is expected as short-term holders aim to make profits or limit losses, whereas long-term holders believe in the long-term potential of Bitcoin.
This shift has led to an all-time high supply from long-term holders and historically low supply from short-term holders. In addition, Bitfinex predicts that Bitcoin will experience heightened levels of volatility in October. This is attributed to the spillover of volatility from the US stock market and the options market pricing in more volatility for BTC.
Despite these market conditions, Bitcoin seems to have decoupled from major US indices, indicating its resilience and unique position in the financial landscape.
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