Bitcoin Price Drops to $94,500 Amid Long-Term Holder Sell-Off
Bitcoin (BTC) trades around $94,500, reflecting a 13% decline from its All-Time High (ATH) of approximately $108,000. This price correction is the most significant since early November.
The Role of LTHs and STHs in Bitcoin Bearish Trajectory
Long-term holders (LTHs) have held Bitcoin for at least 155 days. Historically, they accumulate BTC when prices are lower and sell during price spikes. Recent reports indicate that LTHs have offloaded significant amounts of Bitcoin, reducing their total holdings from around 14.2 million BTC in mid-September to approximately 13.2 million BTC by December.
A notable sell-off occurred last Thursday, with LTHs selling nearly 70,000 BTC in one day, marking the fourth largest sell-off of the year. Such actions contribute to downward pressure on prices as more Bitcoin enters the market amid high volatility.
Short-term holders (STHs), who have held Bitcoin for less than 155 days, have taken advantage of the recent dip, adding about 1.3 million BTC to their holdings. However, their buying volume does not fully counterbalance the selling pressure from LTHs, resulting in a net decrease in price.
Bitcoin’s Circulating Supply and Exchange Dynamics
The supply of Bitcoin and its movement on exchanges significantly influence its price. Currently, there are 19.8 million BTC in circulation, with 2.8 million BTC held on exchanges. The amount of Bitcoin held on exchanges has declined, with around 200,000 BTC leaving exchanges recently, indicating reduced market liquidity and increased price volatility.
This decrease in exchange supply suggests investors may be holding Bitcoin in wallets, possibly in anticipation of future price movements or due to concerns over market fluctuations. Consequently, the overall liquidity decreases, making the asset more susceptible to price swings during large transactions.
The current market situation reflects a delicate balance between supply and demand dynamics. While some analysts suggest the market correction could be temporary, others caution that continued selling pressure from LTHs may persist, particularly if macroeconomic conditions remain uncertain.
Market participants are advised to monitor the behavior of both LTHs and STHs closely to understand potential price movements.