Are HODLers To Decide The Fate Of The Bitcoin Market In Future?
The raging debate among crypto investors after the dramatic and awe crash in past couple of weeks is whether this is the beginning of sustained bear market in cryptocurrency or insignificant clearing of the froth created by leverage-based trading.
After touching an all-time high of $64,863 on April 14, Bitcoin has now given up 50% of its gains with virtually every buyer of the cryptocurrency since February in losses. After the dramatic crash, which saw the cryptocurrency take a dive to nearly $30,000, the currency has moved in a range of $9,000 in the past few days suggesting that the market is still finding its feet after being astonished by the sell-off.
The selloff at the end of May in Bitcoin and other cryptocurrencies was largely influenced by actions taken by China on crypto dealings and miners, which increased liquidation of leverage-based positions in the cryptomarket taken by short-term holders of the cryptocurrency.
According to Bybt.com, as many as 887,000 trading accounts were liquidated on May 20 alone reflecting the losses for investors. Currently, around 26% of the Bitcoin supply held by short term investors is underwater after the crash, according to data on Glassnode.
Interestingly, long-term holders of crypto coins are defined as those who have held their coin for a duration of more than 155 days, have not panicked in the crash of the past couple of weeks.
“LTHs overall have returned to accumulation. This suggests that early bull market buyers have holded a reasonable volume of supply, and should this trend continue, may indicate a longer term supply squeeze is in play,” Glassnode said in its newsletter released on Monday.
simultaneously, Bitcoin miners have also started to gather their coins during the crash. With two major players in the market showing gumption for accumulation of the cryptocoins after such a intense fall, it should give confidence to investors.
still, the fact remains that the longer Bitcoin runs around the $30,000 mark, the more difficult it will get for short-term coin traders as they can’t book the desired profit an a very little time span. Therefore, the selling pressure . will come from this as they are no able t to use any bounce to sell.
What will decide the fate of the Bitcoin market in future is what the long-term holders of the coin, who purchased it during December and January, will do. These coin holders are still at cost on their holding since the price is hanging around the 155-day threshold.
For the time being, It is likely that the Bitcoin market may go nowhere till either the long-term holders or the short-term sellers assert their dominance in this tug of war.
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