Published: June 21st, 2021
With the crypto markets bracing for an almost imminent drop, traders and investors having long-term positions are looking to improve their Bitcoin holdings. Glassnode data puts the “HODLer net position change,” the marker tracking the net buying and selling activity for individuals holding coins for more than six months, in the positive for the first time in almost nine months.
The imminent profound Bitcoin price slip is prompting investors holding long-term cryptocurrency positions to boost them. According to the HODLer net position change, the indicator tracking the net buying and selling activity for traders who hold coins for six months or more, the net buying is positive for the first time since October 2020.
The daily market commentary by Delphi Digital released on Wednesday, June 16, showed that HODLers on the platform are buying now. The Bitcoin HODLers net position is a powerful indicator of the long-term investors’ thoughts about Bitcoin. According to Glassnode, the supply from long-term holders shot up to 11.6 million from 11 million in the past few weeks.
However, the overall market sentiment is that while holders are introducing bulling pressure into the crypto market, the compulsion might not necessarily create a sharp rally. Past data suggest that bullish trends usually gain momentum only after sustained amassing.
The most recent such trend in 2018 shows that the indicator was positive for most of the year. Yet, 2018 was a negative year for Bitcoin. Besides, the trend continued in early 2019, when the coin was confined below $5,000. According to the 2018/19 figures, bullish sentiment clouded the market at the beginning of Q2 2019, lifting Bitcoin’s price to $13,880 by the end of June.
Bitcoin surpassed the June 2019 apex in October 2020 after a 16-month hiatus. During the period in question, Bitcoin had assumed a bearish trend, dropping from $13,000 to $4,000 between late 2019 and early 2020. During the period, Holders were net buyers, only relinquishing their coins in November 2019 when the price recovery began.
Omkar Godbole, a staffer at Yahoo! Finance, said it remains to be seen if the holders will sustain their role as net buyers in the coming weeks. He hopes they would, saying that if they do, their persistence would help mend the coin’s pummeled market confidence.
However, some chart analysts are spelling doom. According to them, the crypto market might experience more selling since the daily plot of the simple moving averages (SMA) (50-day and 200-day) are approaching a death cross or a bearish crossover before Monday, June 21.
Research by Kraken indicates that the previous death cross incidents came with either a sell-off in the following days or a sustained macro downtrend affirming a bear market. Besides, the macro funds that bought Bitcoin as a hedge against inflation, might liquidate if U.S. Treasury bond yields sustain their upward trajectory.
On Wednesday, June 16, the U.S. two-year yield climbed to 0.219%, a 12-month high, while the 10-year yield gained almost 10 basis points to stand at 1.59%. the impressive performance came after the Federal Reserve signaled that it might increase interest rates earlier than some market analysts had predicted.
Despite the mixed signals the market is expressing now, the news of the oncoming death cross was enough to send the price of Bitcoin spiraling. The world’s first cryptocurrency slumped 5% in just 24 hours on Friday, June 18, sending the price straight beneath the $36,000 support level.
Despite the drop, Bitcoin is still up more than 20% year-to-date. The status, notwithstanding, some traders worry that the death cross could sway a shift from a bullish trajectory to a bearish price. However, the worry is not great enough to push the traders’ preference from Bitcoin to equities.
Mike McGlone, the commodity strategist at Bloomberg Intelligence, said that when the equity drag gains strength someday, he expects gold and Bitcoin to be the only beneficiaries. McGlone’s assertions align with those of Mark Newton, the founder of online financial resource destination, Newton Advisors.
Newton said the overall stabilization witnessed recently is not enough to point to buying dips. His cycle work suggests that continued weakness is a lot likely this year. His report, which was mailed to newsrooms implies that for aggressive traders, a break of $30,000 could slide down to $20,000 to $25,000, the best zone to contemplate buying dips while anticipating a rebound.
Aside from the looming death cross, traders and market insiders agree almost unanimously that other factors are responsible for the coin’s generally underwhelming performance in the past week. For instance, ongoing regulatory uncertainty is one such issue.
Environmental concerns might have also led to the downward trajectory of the price, especially after Tesla mentioned it as the reason why it would stop accepting Bitcoin as a payment method for its electric vehicle units.
On Thursday, June 17, cryptocurrency miners in Ya’an, a major crypto mining hub in Sichuan Province in China, got an inspection notice that among other things, requires shutdowns. Besides, Wu Blockchain reported the following day that Alibaba Cloud, the largest cloud service provider in China by volume and customer base, called mining and cryptocurrency firms in the country to warn them of possible domain name cancellations because of regulatory requirements.
In a tweet, Wu Blockchain tried to calm nerves by saying that such actions have little or no impact on the exchanges. The firm’s report said that the affected companies’ servers and registered operational locations are outside China. However, these companies may still need to do some replacements.
According to Damanick Dantes and Frances Yue, CoinDesk columnists, the only silver lining in this new assault on Bitcoin is that institutional demand for Bitcoin and other cryptocurrencies is steadily strong. The two contend that the demand might compel countries to wrestle for crypto-related businesses.
Their prediction sounds right on the mark. On Friday, June 18, BBVA, a Spanish banking giant made its virtual currency trading and custody service open to private banking customers in Switzerland.