Long-term Bitcoin holders are showing exceptional resilience despite facing one of the toughest price cycles. Crypto analytics firm Glassnode notes that these steadfast investors, often referred to as “diamond hands,” are not selling their holdings even as Bitcoin experiences its most significant correction of the current bull market.
Glassnode’s latest weekly newsletter, The Week Onchain, highlighted that long-term holders are maintaining their BTC, indicating strong confidence in Bitcoin’s future value. This contrasts sharply with previous market cycles, where significant drawdowns often led to widespread panic selling.
Minimal Loss-Taking Despite Heavy Drawdowns
The recent Bitcoin price cycle has resulted in increased unrealized losses. However, both long-term and short-term holders have demonstrated restraint. According to Glassnode, the loss-taking events this week represent less than 36% of the overall capital flows within the Bitcoin network.
This stands in stark contrast to significant capitulation events like those in September 2019, March 2020, and May 2021, where losses represented over 60% of capital flows over the span of several weeks. This data suggests a more robust and mature market structure, with holders less inclined to react impulsively to price fluctuations.
Entities that have held Bitcoin for over 155 days have notably avoided selling at a loss during the recent downturn. This behavior underlines their commitment and belief in Bitcoin’s long-term potential, even amid significant market corrections. A chart from Glassnode illustrating the lack of on-chain selling by long-term holders further reinforces this observation.
Future Market Turnaround and Miner Activity
As the market navigates its deepest correction since the FTX collapse, attention has turned to short-term holders and day traders, whose profit margins have recently turned negative. At the recent low of $53,500, short-term holders possessed almost 2.8 million BTC, representing 14.2% of the total supply, with these holdings reflecting an unrealized loss.
This segment of the market remains a focal point as their behavior can significantly influence short-term price movements. Miners are facing difficulties as they go through a phase of hashrate capitulation, which has been likened to the circumstances that preceded the bear market bottom at the end of 2022.
Charles Edwards, the founder of Capriole Investments, pointed out that this hashrate capitulation could precede further price declines, but he also suggested that a buy signal might be “at least a couple of weeks away.” This indicates potential for a market recovery in the near future, despite the current challenges.
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Disclaimer: The information provided on this page is for educational and informational purposes only and should not be construed as financial advice. Cryptocurrency assets involve inherent risks, and past performance is not indicative of future results. Always conduct thorough research and consult with a qualified financial advisor before making investment decisions.
