summary
- The primary factor behind the retracement was the inflation data exceeding expectations.
- The amount of long-term holder (LTH) supply held at a loss decreased to 6.5%, indicating a shift towards distribution.
Bitcoin’s time at $50,000 was brief, with recent developments leading to a minor price correction within the last 24 hours.
Indeed, the flagship cryptocurrency dropped to as low as $48,472 around 5:15 pm UTC on February 13th before rebounding to $49,500 at the time of writing, as revealed by AMBCrypto through CoinMarketCap data.
Concerns regarding a fragile macroeconomic landscape
The primary driver behind the market pullback was the U.S. Consumer Price Index (CPI) data, which surpassed expectations, as reported by on-chain analytics firm Santiment.
The significant inflationary pressure eliminated the likelihood of imminent rate cuts, subsequently weighing on riskier markets such as equities and cryptocurrencies.
For those interested, the Federal Reserve relies on CPI as a measure of inflation in the United States and to adjust its monetary policy.
Long-term holders experience a surge in profits.
However, the minor correction should not overshadow Bitcoin’s recent bullish surge. The world’s largest digital asset has surged by 127% over the past year and was currently trading only 28% below its all-time high at the time of writing.
As a result, the majority of investors were witnessing profits on their investments at the current moment.
Long-term holders (LTH), recognized for holding cryptocurrencies through numerous market cycles, observed a notable decrease in supply held at a loss over the last 3-4 months, according to a report by blockchain research firm Glassnode.
As evidenced, only approximately 6.5% of the LTH supply was held at a loss. Interestingly, these levels were last observed during the early stages of the bull market in mid-2020.
Source: Glassnode
It’s widely understood that long-term holders (LTHs) tend to accumulate assets during bearish market conditions, often at a loss. Subsequently, they tend to distribute their holdings during the early stages of a bull market, and it seemed that this process had already commenced.
There was a notable decline in LTH supply since its peak in November 2023. However, more than 50% of the outflows could be attributed to the Grayscale Bitcoin Trust (GBTC), which also falls under the long-term holder category.
It will be intriguing to observe whether LTH sell-offs accelerate as Bitcoin approaches its all-time high of $69,000.
Source: Glassnode
