Bitcoin is currently experiencing a price decline, with its value falling below the $42,000 mark. This move follows a significant increase in the circulating supply of profitable Bitcoin, triggering a wave of profit-taking among investors.
The head of research at ETC Group, André Dragosch, underlines this trend and points out that more and more Bitcoins are being transferred to exchanges for possible sale. Dragosch noted, citing data from Glassnode:
The overall balance of Bitcoin exchanges has increased significantly, suggesting a net inflow of coins to exchanges over the past week. More precisely, according to Glassnode, around 14,000 BTC net flowed into the exchanges. This is likely to put some downward pressure on prices in the short term.
Bitcoin short-term holders are increasing selling pressure
According to ETC Group, the current market scenario represents a landscape in which a significant portion of Bitcoin and Ethereum addresses are profitable. Data from the company shows that 88.3% of BTC addresses and 77.6% of ETH addresses are currently profitable, close to their highest levels of the year.
This environment, in which a high percentage of BTC and ETH addresses are in the winning stage, has apparently encouraged a portion of investors, especially those with a short-term investment perspective, to capitalize on their profits, according to ETC Group's analysis emerges.
ETC Group also revealed that these short-term investors, defined as those who have held Bitcoin for less than 155 days, have been transferring their profitable assets to exchanges at a pace not seen since July this year.
This increase in selling pressure is attributed to a key factor slowing the Bitcoin rally as the market adjusts to the increased availability of the cryptocurrency.
The market reaction is made even clearer by the fact that last week saw “net outflows” from crypto exchange-traded asset products (ETPs) for the first time since early October.
The total amount of these outflows was approximately $18.2 million, with Bitcoin ETPs recording the majority of these outflows with a total of $13.1 million. In contrast, Ethereum ETPs recorded a “net inflow” of $5.8 million, indicating a difference in investor interest between the two leading cryptocurrencies.
Market Impact and Trader Liquidations
The recent decline in Bitcoin price from its previous high of around $44,000 has impacted investor sentiment and led to significant trader liquidations. According to data from Coinglass, there were 115,873 trader liquidations in the last 24 hours, representing a total liquidation of around $424.67 million.
Bitcoin led these liquidations with $105.51 million in long liquidations and $14.95 million in short liquidations. Ethereum follows close behind, accounting for $78.53 million in long liquidations and $7.41 million in short liquidations.
It is worth noting that these liquidations and fluctuating market dynamics underscore the divided fate of traders in the crypto market. While some investors take advantage of the opportunity to make profits, others face the challenges of rapid market changes.
Bitcoin (BTC) price is moving sideways on the 1-hour chart. Source: BTC/USDT on TradingView.com
Featured image from Unsplash, chart from TradingView
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