bitcoin

“Dramatic Surrender” – Major Crypto Turnaround Looms as Bitcoin, Ethereum, BNB, XRP, Solana, Cardano, Luna, Shiba Inu, and Dogecoin Prices Mix


Following an impressive three-week run, the crypto market hit a pause button.

Over the past week, bitcoin price has retreated to $23,500 after breaking through the important $25,000 resistance level late on Sunday evening. The price of Ethereum
ETH
it fell one notch and fell to $1,850 after breaking above $2,000 for the first time since May.

Altcoins are a mixed bag. XRP
XRP is down 0.8%, BNB
BNB 6.6%, solana 6.8%, Terra ‘luna 2.0’ 7%, while cardano is up 0.9%, dogecoin 13.4% and shiba inu 19.6%.

Meanwhile, in the latest on-chain report, Glassnode calls a “dramatic” shift in bitcoin ownership structure, with hundreds of thousands of bitcoins moving from long-term bitcoin holders to new investors.

Glassnode tweeted: “After a dramatic sellout event, the ownership structure of Bitcoin has been redesigned. As the markets sell, bitcoin migrates from the weakest hands to those that come in at the lowest.

Such a migration, as their analysis shows, is the canary in the coal mine that often heralds the start of a structural bull market.

Zoom out

There are two important on-chain metrics and, probably even more important, the gap between them that gives us some insight into who has been the biggest bitcoin sellers lately.

The first is the “cost basis for long-term incumbents” (LTH-Cost Basis). It estimates the average price at which long-term bitcoin holders bought their coins. In mid-July, the LTH cost base was $22,300, which means that even at current prices, the average long-term bitcoin holder is still on the rise.

The second is the “Long-Term Holder Spent Output Profit Ratio” (LTH-SOPR), which shows how much profit or loss the long-term holders realized after actually sell their coins. According to Glassnode, in July, long-term bitcoin holders were making an average loss of -33%.

This spread between LTH-Cost Basis and LTH-SOPR tells us that the biggest sellers in this year’s rout are those who bought near the top and suffered some of the biggest losses.

And who did they sell to? Short-term holders.

According to data from Glassnode, since the Luna
LUNA
collapse in May, short-term holders recovered 330,000 bitcoins at $20,000 or less, putting them in a “financially advantageous position.”

So what is essentially happening is that bitcoins are migrating from those who bought at the high and are the most price sensitive to those who bought bitcoin at the recent low and are less price sensitive.

Which is a dynamic that has historically marked bitcoin’s lows.

As Glassnode wrote in the note I covered in last week’s Markets article: “For a bear market to reach an ultimate bottom, the share of coins held at a loss must be shifted primarily to those who are the least price sensitive, and with the highest conviction.

Look forward

That said, much of the belief that has brought new investors into bitcoin is largely based on a flurry of positive news.

On the one hand, July’s higher-than-expected inflation rate boosted investor sentiment, boosting most risk assets. Since mid-July, the S&P 500 and Nasdaq have rallied more or less in line with bitcoin.

Bitcoin
BTC
for its part, also won two massive institutional victories.

Earlier this year, Fidelity added bitcoin as an option to its 401k and BlackRock plans
noir
partners with Coinbase to bring bitcoin to its institutional “Aladdin” clients who manage over $21 trillion in assets.

Meanwhile, lawmakers in the US and EU are crafting sweeping crypto legislation that will subject crypto to traditional asset regulations, which could finally legitimize bitcoin in many institutional wallets.

So, if these developments don’t change course, bitcoin could make a comeback. On the other hand, with so much hope, there are a lot of things that can go wrong.

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