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Who’s Dumping Bitcoin? Discover What Fidelity’s Expert Reveals!
Recent trends in the cryptocurrency market raise a critical question: who’s selling Bitcoin? Despite visible buying activity in spot Bitcoin exchange-traded products (ETPs) and corporate acquisitions, price momentum remains sluggish. Chris Kuiper, a prominent figure at Fidelity Digital Assets, highlights this conundrum. He notes that the persistent question from traders revolves around the identity of those supplying the market.
According to Kuiper, the sellers primarily consist of long-term holders, often referred to as HODLers. He utilizes an insightful on-chain metric: the percentage of Bitcoin that has remained inactive for over a year. This metric, known as the “Percent of Supply Last Active 1+ Years Ago,” typically rises during bear markets, as investors hold onto their assets while facing unrealized losses. In contrast, this percentage usually declines sharply during bull markets, as long-term holders capitalize on price strength to sell their assets.
Kuiper illustrates that the current market scenario deviates from historical patterns. In previous cycles, the long-term-holder supply would plummet dramatically as prices surged. However, this time, the decline appears more gradual. He points out that even when Bitcoin reached new highs earlier this year, the long-term-holder line did not experience a drastic drop. Instead, the market is witnessing a consistent slow bleed, characterized by a sideways price movement that lacks significant volatility.
This gradual movement aligns with Kuiper’s observations from client interactions. He notes that Bitcoin’s performance has lagged behind other assets, including gold and the S&P 500. As a result, many investors express fatigue with Bitcoin’s current trajectory. Many had positioned themselves for a traditional four-year cycle, anticipating strong seasonal performance in October and November. When the expected price rally did not materialize, long-term holders began reassessing their strategies for year-end tax strategies and potential profit-taking.
In contrast to previous cycles, such as the notorious 2017-2018 bubble, the current cycle’s chart indicates a more subdued drawdown of long-term-holder supply. On-chain analyst insights further support this perspective, revealing that the 1-year inactive supply drawdown currently mirrors that of the 2021 cycle, with about a 10-percentage-point decline. However, this trend is occurring over a more extended and fluctuating price period rather than a sharp profit-taking spike.
Kuiper acknowledges the insights provided by alternative visualizations of this supply dynamic. He emphasizes the importance of monitoring the slope of this metric, along with other indicators, to gauge seller exhaustion. Despite positive fundamental developments, price action remains lackluster, suggesting a divergence that traders must navigate carefully.
As the cryptocurrency market continues to evolve, understanding these underlying dynamics becomes crucial for investors. For further insights into cryptocurrency trends, explore our extensive crypto coverage.
As of now, Bitcoin’s price stands at $102,609. Investors should remain vigilant and informed about market fluctuations and emerging trends.
For additional resources and trading opportunities, visit Binance to explore the latest in cryptocurrency trading.
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