Bitcoin (BTC) price has risen 21% in the past seven days, reaching $52,000 for the first time since December 2021. The main reason for the price spike was increased inflows into spot Bitcoin exchange-traded funds (ETFs), which reached an all-time high. Traders speculate that over-the-counter (OTC) desks are depleting the coin’s reserves and turning to physical purchases on regular exchanges, creating an unbalanced situation that favors bullish momentum. are doing.
Although such a hypothesis is easy to believe and somewhat misleading, Glassnode’s on-chain data shows that the supply of short-term holders is dwindling, and if the situation holds, Bitcoin price could reach 50,000 yen. It could rise above $5,000.
Short-term Bitcoin holders are selling at a fast pace
It is important to dispel the misconception that arbitrage desks are always net long (buyers). This means that the arbitrage desk has a directionality in price. Gaining a significant position in the spot market is critical to business, but is often hedged using derivative contracts. Similarly, not all his OTC trades require buyers and sellers, as the intermediary can rely on spot exchange order books or futures contracts to fulfill requests. In short, whether or not an arbitrage desk has a “buffer” to transfer coins instantly does not change the price trend.
So if the Spot Bitcoin ETF issuer added a net $1.84 billion of BTC over the past week, other companies would have sold the same amount as well. An important issue for price formation is how desperate both parties are to complete the deal. A long-term holder, an address where he has not moved coins for more than 6 months, is usually less likely to sell after a price rise. For this reason, analysts look to on-chain analytics to get a rough idea of how resilient markets are amidst volatility, as a measure of investor strength and belief.
According to the data, short-term holders of addresses that raised funds within the past six months significantly increased their trades to the exchange by an average of 49,504 BTC per day over the past week. In contrast, a long-term holder transferred only 2,023 BTC per day during the same period, suggesting that short-term holders are the main sellers. Even though 79% of the supply is held by long-term holders, there is potential for rapid selling.
Addresses with less than 100 BTC were sold in the past week
However, some may argue that the whales that bought Bitcoin in anticipation of the launch of spot ETFs are now operating on the seller side, making it difficult to achieve a higher breakthrough. But the data shows otherwise.
Who sold all their Bitcoin to ETFs yesterday? Little people ♂️ pic.twitter.com/q5IxdUxlBH
— HODL15Capital (@HODL15Capital) February 14, 2024
Notably, all classes of holders have been net short over the past seven days, with the exception of very large whales holding over 100 BTC, which are likely to represent institutions. These investors added a total of 20,168 BTC, making it worth over $1 billion. This can be attributed to spot Bitcoin ETF issuers such as BlackRock, Fidelity, BitWise, and Ark 21Shares. While the sustainability of this inflow is uncertain, data suggests demand for ETF products increases as Bitcoin prices rise, providing strong support for bullish momentum.
Related: Bitcoin market capitalization exceeds $1 trillion
This data proves that the rally above $55,000 is no longer solely dependent on retail flows. As a result, metrics that previously reflected results, such as Google search trends and the Fear and Greed Index, may not accurately reflect institutional investors’ risk appetite and subsequent demand for Bitcoin.
Short-term Bitcoin holders have been quick to transfer their coins to exchanges, and the price has soared from $42,900 to $52,000 (up 21%) in seven days. Unless long-term holders decide to reduce their positions beyond a certain price level, all signs point to supply-side weakness favoring further upside above $52,000.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.
