For the better part of this week, Bitcoin has been directionless. After the dump of July 4 and 5, prices steadily bounced back over the weekend before moving horizontally.
If anything, expectations were high that BTC would easily rip higher, piercing through $60,000. Even so, the world’s most valuable coin is around record highs at spot rates, roughly 3X from 2017 peaks.
This preview is a massive vote of confidence for bulls, and there is even more data that supports buyers. Though the short-term trend is bearish, and Bitcoin prices are aligning with last week’s bear trend, there is hope.
BTC Sellers Drop By 90% In Just 3 Years
Buyers remain upbeat about what lies ahead. At the same time, and most crucially, on-chain data shows that the number of entities selling BTC has declined steeply over the years.
Taking X, one analyst noted that the average number of daily addresses depositing BTC to leading exchanges like Coinbase or Binance for liquidation has been plummeting.
The number stood at 234,000 in May 2021, shrinking from around 292,000 in 2018. However, as of July 2024, the average has dropped sharply to a mere 22,000.
Interestingly, the number of BTC sellers rapidly fell throughout the crypto winter when prices quickly dropped, flushing speculators in 2022.
The collapse of crypto hedge funds like 3AC and the shakeout of FTX didn’t faze these holders, as seen from the number of selling addresses.
Even after these major events, the seller base’s continued low level suggests a fundamental shift in investor sentiment.
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Bitcoin Rewards The Patient, Holders Not Selling
There could be several interpretations of this development. For one, the contraction means the demand for BTC is high; thus, those with the coin are unwilling to sell.
However, another plausible explanation is that others consider BTC a long-term investment and are willing to ride through short-term volatility.
Indeed, as data shows, long-term holders who are willing not to see the coin over the last five years, for example, are deep in the money. Despite the recent fall from the all-time high, their average purchase BTC price is less than $8,000.
Currently, Bitcoin is facing headwinds primarily from the dump initiated by the German government and fears of Mt. Gox distribution.
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Despite these bearish sentiments, data shows that the speculative frenzy seen in the second half of 2023 through to Q1 2024 is reducing. For this reason, buyers are likely preparing for a push higher in the coming sessions.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
