Bitcoin long-term holders locking in profits could lead to BTC price pullback

Bitcoin’s recent surge has seen many long-term holders locking in profits, leading to a potential price pullback. As investors take advantage of high prices to sell off their holdings, the supply of bitcoin on exchanges could increase, leading to a decline in demand and subsequent price decrease. While this could be a temporary setback, it highlights the importance of monitoring market trends and investor sentiment when making trading decisions.

Bitcoin Long-Term Holders Sell for Profit: A Look at the Bitcoin Market

Bitcoin is surging past $28,000, and this has caused long-term holders (LTH) to sell some of their holdings for the first time in almost a year. According to a recent analysis by CryptoSlate, long-term holders are the most important factors in the transition from a bear market to a bull market. This is because their behavior determines local bottoms and fuels future price rallies. However, the transition from a bear market to a bull market is often a tumultuous and volatile process. The slight decrease in supply that began in February saw an almost vertical drop between March 15 and March 17 — when LTHs sold off approximately 43,543 BTC.

Bitcoin’s Spent Output Profit Ratio (SOPR) reached 1.02 on March 16. It surged past 1.14 again on March 18 and stood at 0.98 at press time. A SOPR value higher than 1 implies that the coins spent on that day are, on average, selling at a profit. This is the first time since January 2020 that long-term holders sold their BTC to lock in profits. All LTH selloffs since then have been a result of capitulation. This behavior is seen in the increase in transfer volume from LTHs to exchange addresses.

According to Glassnode, the long-term holder spending cost basis has almost met Bitcoin’s spot price. On March 20, LTH spending cost basis reached just over $29,000 — while BTC reached $28,400. If LTHs continue to sell their BTC, we could see a price pullback in the coming weeks. The market tends to react with volatility whenever long-term holder supply decreases, which could erase most of the gains Bitcoin made since the ongoing banking crisis began.

In conclusion, long-term holders are the key drivers of the Bitcoin market in the transition from a bear market to a bull market. As LTHs rush to sell off some of their holdings, we can expect volatility in the coming weeks. Investors must keep an eye on the market and take appropriate action to protect themselves from losses.

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