On-chain data suggests that short-term Bitcoin holders did not capitulate during the crash, a sign that a change has occurred in the market.
Short-term Bitcoin holders haven’t done much loss selling recently
As analyst James Van Straten pointed out in a job on X, short-term BTC holders haven’t sent many BTC at a loss recently, despite the asset’s price falling.
THE “short-term holders» (STH) refer to Bitcoin investors who purchased their coins in the last 155 days. These investors make up one of the two main divisions of the BTC market, with the other cohort known as “long-term holders» (LTH).
Statistically, the longer an investor holds onto their coins, the less likely they are to sell them at some point. As such, LTHs are considered the strong side of the market, while STHs are considered the weak hands.
In general, STHs sell easily whenever a change occurs in the market, such as a crash or rally. As such, one would expect that these investors would also have participated in some selling during the token’s latest fall.
One way to know whether or not these investors are selling is to track their foreign exchange deposits. Holders do not always deposit on these platforms to sell, as they also offer other services, but inflows during a rally/crash are most often an indication of a selloff.
In the current debate, it is not the entire volume of exchange transfers for this cohort that is of interest, but only the part deposited at a loss. As Straten points out in the chart below, a curious pattern has emerged in this volume of loss-making FX inflows for STH.
The value of the metric appears to have been on the decline in recent weeks | Source: @jvs_btc on X
As the chart above shows, Bitcoin transfer volume from loss-making STHs to exchanges saw a huge spike in January as the market retreated following the approval of exchange-traded funds (ETFs). ) in cash.
During the price decline that followed the May peak, the measure also saw a sharp rise, although significantly smaller than in January. It would appear that during these two withdrawals, the STH demonstrated a significant reaction of capitulation.
However, during the last crash, the trend does not seem to have been the same. “What’s really interesting is that over the last two days, Bitcoin has fallen 12%, but STH has sent very little Bitcoin to exchanges at a loss,” notes the analyst.
This suggests that these weak hands have recently gained strength. “Lettuce hands are becoming a little less ragged, a sign of a maturing market,” says Straten.
BTC Price
Bitcoin has shown some recovery from the crash over the past 24 hours, with its price now back to the $60,700 level.
Looks like the price of the asset has shot up over the past day | Source: BTCUSD on TradingView
Featured image by Michael Förtsch on Unsplash.com, Glassnode.com, chart from TradingView.com
