How is Hodler Responding to Bitcoin’s Current Weakness?
Based on the Real Cap HODL Wave Index, which shows how bitcoin holders of different ages are spending their money, Glassnode says long-term BTC holders are holding on to their coins despite the price.
“The amount of BTC flowing in and out of exchanges is balanced. Short-term holders seem to fear market volatility the most. Meanwhile, long-term holders are still holding onto their coins and not doing much with them.”
BTC Real Cap HODL Wave Chart | Source: Glassnode
Glassnode says that while short-term traders are buying BTC, they are selling it shortly after seeing the price drop.
“People buy dips. However, it might not be the last drop, so they resell and then someone buys that BTC. Balance sheets on exchanges show that short-term traders are repeating this action. Currently, every 1 BTC sent to the exchange is withdrawn from the exchange 1 week later.”
Glassnode says the increasing amount of BTC being accumulated by long-term holders is a constructive sign, but that people need to beware when long-term holders start spending their bitcoins.
“A bearish signal will appear when the realized ceiling HODL starts to rise again, showing that the old coins are being used, which means that some long-term holders are starting to lose confidence in the market. School.”
Bitcoin forms new growth signal
Cryptocurrency analysis firm Santiment says Bitcoin is starting to form a new breakout indicator.
While BTC is currently trading below $40,000, Santiment points out that gold prices are skyrocketing.
Right now, gold is up about 5% over the past two weeks, marking a strong rally for the precious metal.
While Bitcoin is showing weakness along with the US stock market correction, Santiment said that if BTC manages to break out of correlation with the stock market, it will be an important sign of a fresh recovery.
???? #Bitcoin is barely staying above $40,000 and this mid-week drop to the end of the week coincided with that #SP500 fall again. In the meantime, #Gold has surged to an 8-month high. search for one $BTC Correlation break as a sign of a positive breakout. ???? https://t.co/QyUyr5Zgzz pic.twitter.com/8481wsk1vk
— Santiment (@santimentfeed) February 19, 2022
“Bitcoin is barely bouncing around the $40,000 region and the decline over the weekend coincided with the S&P 500 falling again. Gold has since recovered to an eight-month high. Breaking the correlation between BTC and stocks would be a sign of a strong bull run.”
In the version notification Recently, the chief executive officer of digital asset manager Pantera Capital made similar comments to investors about the correlation between cryptocurrencies and traditional markets.
Joey Krug, Pantera’s co-chief investment officer, has noted that while cryptocurrencies tend to correlate with traditional macro markets, they only last for a fairly long time before disappearing.
“Over the next few weeks, crypto will essentially break away from the traditional market and start trading on its own again. There are a number of reasons for this: First, crypto is still a relatively small market, so things like the Federal Funds Rate of 1.25% vs. 0% don’t make much of a difference… The correlation between the two markets will increase over the next few weeks fade and cryptocurrencies will continue to be traded independently.”
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