Bitcoin Retraces But Diamond Hands Are Back: A Primer for $100,000?

The Bitcoin price is cooling off and has failed to break $72,000. Now, BTC on-chain data shows that “diamond hands” are re-accumulating.

Bitcoin is currently struggling, and even after encouraging gains last week, bulls didn’t breach $72,000.

Hidden bullish divergence right around all-time highs, just like we saw in early 2017.

If history is any indication, we are in for a ride.#Bitcoin pic.twitter.com/KWoLE1WaKJ

— Jelle (@CryptoJelleNL) May 28, 2024

While this prints out, Glassnode picks out interesting developments from on-chain activity.

Specifically, according to the blockchain analytics platform, long-term investors, also known as “diamond hands”, are re-accumulating BTC for the first time in over five months.

The shift could signal that the recent weakness is over, and bulls are ready to push prices higher after the post-halving dip saw BTC drop by over 20% to as low as $56,500 in early May 2024.  

Diamond Hands Are Re-Accumulating After Post-Halving Dip

Of note, the correction was one of the deepest since the sell-off in late 2022 following the collapse of FTX. This retracement, Glassnode explains, was likely due to profit-taking from diamond hands. Their action led to “an overhang of supply that led to a period of correction.”

Since sellers appear exhausted, long-term holders are sensing an opportunity and re-accumulating, expecting more price gains.

In light of the current state of price action, Glassnode analysts note that Bitcoin is now similar to the 2015 to 2017 bull run, especially regarding correction patterns. The only difference between then and now is that the surge to 2017 peaks at around $20,000 was purely retail-driven. 

Following the approval of spot Bitcoin ETFs in January, the trading and investment state in BTC has completely changed. Billions of dollars continue to pour to spot Bitcoin ETFs via issuers like BlackRock and Fidelity.

Last week, following a sharp spike in Bitcoin prices above $66,000, investors began flocking back to spot BTC ETFs. On average, Glassnode notes that inflow to these products stood at around $242 million daily.

 This influx was way more than the estimated $32 million of BTC disposed of every day by miners. The resulting imbalance helped push prices higher, further improving sentiment.

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More BTC Holders Are In Profit, But FOMO Is Yet To Set In

With prices rising, the “percent supply in profit” is also increasing. This historically entices profit-taking from long-term holders. 

However, if prices continue rising, the market will enter the “Euphoria” phase, during which most BTC holders will be in profit. 

So far, Glassnode notes that BTC is in the early stage of “Euphoria,” with over 93% of BTC holders in profit. 

(BTCUSDT)

If the current uptrend is sustained, pushing Bitcoin to new highs–perhaps to $100,000, more diamond hands will be tempted to sell, heaping pressure on the coin. 

Nonetheless, only time, price, and LTH activity will determine when this begins. 

At March 2024 peaks, Glassnode says diamond hands sold around 519,000 BTC monthly, mostly due to GBTC liquidation. 

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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

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.
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