Long-Term Holders Transitioning to Profit-Taking
Recent data indicates a notable increase in exchange inflow volume from Bitcoin (BTC) long-term holders, signaling a shift towards profit-taking among these investors. This movement suggests a potential short-term price correction for the leading cryptocurrency, as coins held by long-term holders are being transferred to short-term holders.
Analysis by CryptoQuant Analyst
In a comprehensive report, CryptoQuant analyst Yosei Dent delves into the on-chain activity surrounding Bitcoin, particularly focusing on exchange inflows. Dent highlights a significant uptick in the amount of BTC held by long-term holders that have been transferred to exchanges, particularly as BTC surpassed the $51,000 price mark on February 14th.
Dent’s Insights
Dent’s analysis reveals that a substantial portion of BTC, specifically 5,153 BTC from the 6-month to 12-month age band, was moved into exchanges. These BTC were acquired by investors during the bull market run of 2023, which culminated in BTC reaching a multi-month high of $42,000 at the close of the trading year.
Furthermore, Dent notes that on the same day, there was a brief surge in exchange inflow volume from holders who have held their BTC for three to five years, amounting to 2,123 BTC. These investors predominantly acquired their coins during the bull run spanning from 2019 to 2021, indicating a potential profit-taking behavior.
Market Implications and Potential Price Correction
The increase in exchange inflow from long-term holder cohorts typically precedes a price pullback for BTC. This trend is attributed to short-term holders, often referred to as “weak hands,” who are quick to sell their holdings at the slightest hint of negative sentiment.
Dent’s Assessment
However, Dent emphasizes that compared to previous cycles, the scale of exchange inflow from long-term holders in the current cycle remains relatively small. Despite this, the movement of coins from long-term holders to short-term holders suggests a potential correction in BTC’s price.
Overall Market Status
At the time of reporting, BTC is trading at $51,245, experiencing nearly a 30% increase in value over the past month. Notably, 92.23% of all BTC addresses are currently “in the money,” indicating that the majority of holders are holding the asset at a profit. Conversely, approximately 5% of BTC addresses, constituting 2 million addresses, are holding their coins at a loss, having acquired them within the price range of $52,000 to $67,000.
