Shift Toward Spot Trading for Bitcoin
Analysts at crypto exchange Bitfinex have observed a significant shift toward spot trading for Bitcoin. This shift is driven by long-term BTC holders who are persisting in their accumulation strategy despite unfavorable market conditions. According to the latest Bitfinex Alpha report, long-term holders now account for 80.34% of the total bitcoin supply, equivalent to 15 million BTC. In contrast, assets held by short-term holders have decreased to 19.34%. This data suggests a strong commitment to holding assets among long-term holders.
Long-term Holders Continue Accumulation
Long-term holders are continuing their accumulation strategy, resulting in negligible realized profits and losses for bitcoin. Bitfinex’s report reveals that the realized profit and loss per BTC has reached its lowest level since 2019. Currently, the realized profit stands at $724, while the loss is $236. In comparison, during April 2021 and May 2022, the average profit and loss figures were $12,900 and $6,700 respectively. This decline indicates that the market is in a transitional phase with increased volatility.
“Given these current levels, which are markedly lower than the last cycle’s profit and loss figures, the majority of coin transactions are occurring around their original cost basis. This paints a picture of a market where the dominant players are either seasoned holders who are indifferent to price changes or traders scrambling for a slightly advantageous position,” Bitfinex said.
An Illiquid Market
Bitfinex analysts also highlighted the significant gap in supply between long-term and short-term holders. This behavior typically occurs at the start of a bull market or during a transitory phase when the market remains illiquid after a pullback. As the crypto market continues to be illiquid, spot transactions are expected to play a crucial role in determining market movement in the coming weeks and months.
Additionally, both BTC and Ether have experienced a surge in open interest in futures markets. BTC’s aggregate open interest across centralized crypto exchanges has surpassed $8.7 billion, indicating potential volatility and mass liquidations for both short and long positions.
Hot Take: Long-term Holders Drive Spot Trading Amidst Market Challenges
The latest Bitfinex Alpha report reveals an interesting trend in the crypto market. Despite unfavorable conditions, long-term Bitcoin holders persist in their accumulation strategy, leading to a significant shift toward spot trading. These holders now control 80.34% of the total bitcoin supply, while short-term holders account for only 19.34%. The data suggests a strong commitment to holding assets among long-term holders.
Furthermore, the market is currently experiencing negligible realized profits and losses for bitcoin, indicating a transitional phase with increased volatility. This paints a picture of a market where dominant players are either seasoned holders or traders seeking advantageous positions.
As the market remains illiquid, spot transactions will play a crucial role in determining future market movements. Additionally, the surge in open interest for BTC and Ether futures markets signals potential volatility and mass liquidations for both short and long positions.
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