On-chain data has hinted at the factors causing Bitcoin’s value to regress amid the presence of institutional players.
Over the past week, Bitcoin experienced more pronounced declines, contrary to expectations following the approval of the Bitcoin spot ETF.
Bitcoin nearly retested $49k on January 11 after the spot BTC ETF approval. This clearance has ushered trillion-dollar asset managers like BlackRock into the Bitcoin market.
However, the asset has sunk 17.7% from the brief $48,650 on January 11 to about $40,500 in the last 24 hours. As a result, market intelligence firm IntoTheBlock moved to unravel the mystery behind this unexpected downturn.
Heightened CEXs Inflow
One noteworthy observation was the consecutive weeks of inflows into centralized exchanges (CEXs). Specifically, IntoTheBlock disclosed that CEXs saw an influx of Bitcoin for six weeks straight, with almost $2 billion in net deposits recorded since December.
Typically, such trends of sustained deposits into centralized exchanges signal sell-offs as the platforms offer a straightforward route to fiat. Yet, a critical question arises regarding the specific entities exerting selling pressure on the Bitcoin market.
Who is Selling?
A key insight emerged from the data concerning Bitcoin’s average holding time for transacted coins. According to IntoTheBlock, this metric reached an all-time high on Monday, marking the second-highest weekly duration.
Essentially, the intelligence firm suggested that long-held BTC tokens began circulating. It attributed the renewed outflow to individuals exiting the Grayscale Bitcoin Trust (GBTC).
Meanwhile, the Balances by Holdings metric presented an intriguing trend. Addresses holding over 1,000 BTC increased their wallets, while those with fewer than 1,000 BTC decreased their holdings in January.
Notably, addresses that have held Bitcoin for 1-12 months are among those reducing their balances.
Simultaneously, long-term holders, who have been significant forces in previous months, adopted a more subdued position. Per the report, their portfolios now reflect a slight decrease in their overall Bitcoin holdings.
Meanwhile, short-term Bitcoin holders increased their Bitcoin positions. The analysis noted that the trend has been consistent since October 2023, which is typically associated with bullish markets.
Bitcoin Top Not In Yet
Despite concerns about the transition from long-term to short-term holders, IntoTheBlock argued the current scenario differs from previous market tops.
It pointed out factors such as a lack of volume compared to previous bull markets. Also, it noted a limited decrease in long-term holders’ balances.
As a result, the analytic platform suggested that Bitcoin may be experiencing a temporary setback rather than entering a bearish trend. It foresees the asset coming back strong into the bullish territory.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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