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Bitcoin Dominance: Traders Preferring The OG To Dogecoin & Other Altcoins

On-chain data suggests Bitcoin has recently experienced an influx of investors while Dogecoin, Cardano, and other altcoins have seen a slowdown.

Bitcoin Total Amount Of Holders Rise While Altcoins See Flat Movement

According to data from the on-chain analytics firm Santiment, the number of Bitcoin investors has sharply increased recently. The on-chain metric of interest here is the “Total Amount of Holders,” which keeps track of the total number of addresses on a given network carrying some non-zero balance.

When the value of this indicator goes up for any asset, it can be due to several things. The first and most obvious contributor to this trend would be adoption, as a fresh influx of users would naturally create more addresses.

Another contributor could be old investors returning to reinvest in the coin after selling out their balance earlier. The indicator would also increase when investors spread out their holdings among multiple wallets for reasons like privacy.

In general, some net adoption occurs whenever the Total Amount of Holders goes up. Historically, adoption has been a constructive sign for any blockchain in the long term.

Naturally, when this metric’s value goes down, it implies that some investors have decided to exit from the cryptocurrency as they have completely cleaned out their wallets.

Now, here is a chart that shows the trend in the Total Amount of Holders for some of the top assets in the sector: Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Cardano (ADA), Dogecoin (DOGE), and Chainlink (LINK).

Bitcoin Total Amount of Holders Vs Dogecoin

As displayed in the graph, Dogecoin started 2024 with some rapid adoption as its Total Amount of Holders had been observing a sharp uptrend. However, this growth only lasted for the first couple of months, as the metric has since flattened for the memecoin.

Other altcoins like Chainlink and Cardano have also witnessed flat action in the metric in this period. The trend had been just the opposite for Bitcoin, where more or less flat movement had occurred in its number of investors earlier in the year, but the asset has seen some uptrend in the metric this month.

It’s possible that investors were previously attracted to Dogecoin and other networks, but now that markets have been undergoing bearish price action, traders are back to preferring the original cryptocurrency.

Overall, DOGE’s holders are still up 13.8% in the past three months, while BTC’s growth stands at 2.6%. Naturally, the latter’s userbase is also larger, so a relatively small percentage could be due to that.

Cardano is among the few networks in the sector that have observed negative action in the Total Amount of Holders during this window, although the decrease is a mere 0.1%.

BTC Price

Bitcoin has been struggling to make any recovery run count recently, as its price is back at $63,000 after the latest failed attempt.

Bitcoin Price Chart

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Is Bitcoin About To Skyrocket? Bitfinex Analysts Spot Familiar Patterns From December 2020

According to analysts at Bitfinex, Bitcoin and its recent activity on exchanges reflects a pattern reminiscent of December 2020, hinting at a possible growth phase.

The exchange’s latest report highlights a significant decline in the supply of Bitcoin held by long-term investors on centralized exchanges, reaching its lowest levels in 18 months.

This trend, coupled with the forthcoming halving event, suggests a scenario conducive to further price appreciation, as stated by the analysts.

Potential Growth On The Horizon

The Bitfinex Alpha report underscores the diminishing inactive supply of Bitcoin, particularly those assets stagnant for over a year. This reduction implies that long-term holders either reduce their positions or transfer their assets off exchanges.

Bitcoin Exchange Supply.

Such actions are fundamental to understanding Bitcoin’s price dynamics, especially as the halving event approaches.

With an increasing number of BTC leaving centralized exchanges and a decrease in inactive supply, the market is primed for “potential growth,” according to Bitfinex analysts. They add that this mirrors the conditions observed before the significant market surge in December 2020.

On a broader scale, data from CryptoQuant corroborates Bitfinex’s observations, indicating a continuous decline in Bitcoin exchange reserves since July 2021. This decline, which has seen reserves plummet from 2.8 million to approximately 1.94 million, suggests a sustained trend of Bitcoin leaving exchange wallets.

Bitcoin Latest Price Action

Meanwhile, Bitcoin’s price performance has taken a downturn, notably beginning late last week Friday and continuing throughout the weekend. The top crypto witnessed a significant decline, plummeting from above $70,000 to as low as $62,000.

Notably, this downward trend has persisted over the past 24 hours, with the asset experiencing a decrease of 4.6% during this period and over 10% in the past week, leading to its current trading price of $62,034 at the time of writing.

Bitcoin (BTC) price chart on TradingView

Amidst these price movements, signs of panic have emerged within the Bitcoin market. Recent data from Whale Alert sheds light on a significant transfer involving 7,690 BTC, valued at $483 million, to Coinbase, the largest cryptocurrency exchange in the United States.

While details about the origin of the address, “1Eob1,” remain undisclosed, it’s important to recognize that such transfers to exchanges often signal potential intentions to liquidate holdings. This occurrence typically suggests a readiness to sell off assets within the crypto sphere.

Furthermore, should the entity responsible for this transfer decide to sell off the entirety of the deposited BTC, it could potentially exert a notable influence on the broader Bitcoin market.

Featured image from Unsplash, Chart from TradingView

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Profit-Taking Panic, Short-Term Bitcoin Holders Sell Off – What’s Next For BTC?

Recent on-chain data highlighted a significant trend: a wave of profit-taking by investors who have held Bitcoin (BTC) for less than five months.

As detailed by CryptoQuant’s latest data, this phenomenon is not just a random market movement but an echo of patterns observed at the zeniths of previous bull markets.

Profit-Taking Among Short-Term Bitcoin Holders Signals Market Shift

According to CryptoQuant, the Spent Output Profit Ratio (SOPR), a key metric in evaluating the profit and loss of Bitcoin transactions over a specific period, showcases a pronounced uptick indicative of widespread profit realization.

This tendency among short-term holders to liquidate their holdings for gains parallels historical market peaks and suggests a critical juncture for Bitcoin.

Bitcoin Short Term Holder metric.

Crypto Dan, a seasoned market analyst, emphasized the significance of this trend, stating, “This movement is something that only happens once every few years,” highlighting the uniqueness and possible consequences of the present market trends.

New Market Forces At Play: ETFs Inflow Set To Rebalance The Equation

While the SOPR metric might signal alarm bells reminiscent of past bull market peaks, the crypto landscape is underpinned by factors that could mitigate the traditional outcomes of such profit-taking.

Among these is the recent introduction of a BTC spot Exchange-Traded Fund (ETF). This new avenue for Bitcoin investment introduces a complex layer to the market’s dynamics, potentially cushioning any adverse effects of short-term holders’ profit-taking activities.

Dan concluded by noting:

But considering the BTC spot ETF and potential additional inflows from institutions and individuals, it is difficult to judge it as simply a signal of the peak of a bull market. After a short-term correction period, it’s very likely that we will see a strong further bull in 2024.

CoinShares Head of Research, James Butterfill, provides a further layer of analysis, suggesting an imminent “positive demand shock” for Bitcoin. According to Butterfill, the delay in making spot Bitcoin ETFs accessible to the Registered Investment Advisors (RIA) market — a sector managing around $50 trillion in assets — is set to end.

With RIAs requiring three months of trading data before including new ETFs in their portfolios, the market is on the cusp of witnessing a substantial influx of new investments into Bitcoin. “If 10% of RIAs chose to invest 1% of their portfolios, this could result in approximately $50 billion in additional inflows,” Butterfill elaborated, highlighting the scale of potential market impact.

Moreover, the current supply-demand dynamics within the Bitcoin market are skewed towards increasing demand against decreasing supply.

The daily demand for BTC, fueled by the trade of spot BTC ETFs and the average production of new coins, underscores a growing discrepancy that ETF issuers are filling by tapping into the secondary market.

This scenario is evidenced by a dramatic decrease in OTC desk coin holdings, a direct consequence of ETF-driven demand, according to Butterfill.

Bitcoin (BTC) price chart on TradingView

Featured image from Unsplash, Chart from TradingView

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Over 80% Of Bitcoin Holders Now In Profit – Report

In the last week, Bitcoin has garnered much attention, gaining 2.58 % in seven days, according to data from CoinMarketCap. During this time, the premier cryptocurrency has moved from trading around  $37,800 to almost breaching the $39,000 price mark. 

Following this positive price movement, Bitcoin has recorded some impressive metrics, which could bolster investors’ interest in the coming weeks.

Bitcoin Experiences Highest Profitability Level In Two Years

Via a Friday post on X, blockchain analytics firm IntoTheBlock reported that 81.35% of all Bitcoin holders are currently in profit. This marks the highest profitability level experienced by BTC investors since December 2021, when the token was valued at over $50,000.

Interestingly, Bitcoin’s profitability is likely to go higher, with several factors indicating the market leader may soon cross into the $40,000 price zone. 

Firstly, there is currently a high level of optimism regarding the approval of a Bitcoin Spot exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC). On Friday, Bloomberg analyst James Seyffart injected much hype into the crypto community as he predicted that this potential approval order would come between January 8 – January 10, 2024.

Therefore, in anticipation of the massive institutional demand a spot ETF could introduce to the BTC market, investors are likely to start increasing their Bitcoin holdings, which could result in a price boost in the following weeks. 

Furthermore,  the US Federal Reserve Chairman Jerome Powell has made statements suggesting that there would likely be no more rate hikes in the coming months. This development, if true, paves the way for Bitcoin, alongside other digital assets, to experience more price gains as increases in fed rate hikes are known to discourage investments in high-risk assets such as cryptocurrencies. 

However, despite these favorable indicators, it is worth stating that the crypto market remains subject to multiple forces, and all investors are advised to conduct proper research before engaging with the market.

Bitcoin Network Fees Slashed By 50%

In other positives for the BTC community, the Bitcoin network experienced a 50% decline in total fees in the last week. IntoTheBlock reports that this development was due to a drastic decline in ordinals-related transactions.

The Ordinals protocol, launched in January 2023, allows the creation of non-fungible tokens (NFTs) known as BRC-20 tokens on the Bitcoin network. Similar to the Ethereum network with its native NFTs, a high level of interest in Ordinals results in high network fees and vice versa. 

At the time of writing, Bitcoin trades at $38,758, with a 0.17% decline in the last hour. Meanwhile, the asset’s daily trading volume is up by 4.97% and is valued at $20.37 billion. 

Bitcoin

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Bitcoin Price Plunge: Long-Term Holders Buy $1.35 Billion Worth Of BTC

A new report from Glassnode, an on-chain analytical firm, has buttressed recent data indicating Bitcoin holders are adding to their holdings. These long-term Bitcoin investors, often known as “HODLers,” don’t appear to be phased by the recent volatility in Bitcoin’s price.

 According to on-chain data, long-term holders have been rapidly amassing Bitcoin, adding more than 50,000 BTC each month to their holdings.

Monthly Accumulation Of BTC Worth $1.35 Billion

Bitcoin is currently showing signs of slowing down, as its price just dipped below $27,000. It would appear that short-term speculators are mostly to blame for the persistent selling pressure, as data shows whale investors are seeing this opportunity to buy more BTC at a discount rather than secure profits. 

According to Glassnode’s HODLer Net Position Change metric, long-term holders are purchasing an average of 50,000 BTC worth $1.35 billion at the current price of Bitcoin every month.

Another metric, the Long-Term Holder Supply, which measures the amount of BTC’s market cap with holders, also reached an all-time high of 14.859 million BTC. This means 76.1% of the total circulating supply has not moved in the past five months. Consequently, 94.8% of the total Bitcoin supply has not moved in the past month.

Bitcoin holders

To back up this data of increased accumulation, popular crypto analyst Ali Martinez shared chart data from Santiment showing Bitcoin whales have purchased around 20,000 BTC since the beginning of October, worth roughly $550 million. 

At this rate, the number of BTC vaulted by holders is poised to pass 50,000 in October. This increased accumulation suggests that long-term holders remain confident in Bitcoin’s long-term potential and see this price correction as temporary.

Bitcoin price chart from Tradingview.com (BTC long-term holderS)

Bitcoin Supply Tightens

According to Glassnode, only 11.5% of BTC’s circulating supply changed hands in the last 3 months, indicating a prolonged inactive period of on-chain activity. That there are fewer transactions suggests that investors are unwilling to sell at the current price as the industry awaits approval of spot Bitcoin ETFs. 

Bitcoin volume

If this current trend holds, then the current downtrend could be short-lived, especially if sentiment among smaller traders also turns toward buying. A predominantly hold mentality would give the asset time to recover and establish significant support that serves as a bounce-off point for another rally.

Bitcoin is currently trading at $26,766 and is down by 1.31% in a 24-hour timeframe as it approaches the next major support near the $26,500 level. If enough large players accumulate at these lower prices, it may establish a price floor as bulls push the price back up.

As crypto analyst James Straten points out, Bitcoin could jump 50% as part of the correlation between the Grayscale Bitcoin Trust and the price of BTC. 

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Crypto Funds Vs Bitcoin Holders: Who Was The Better Performer In H1 2023

A new report has shown investors who held Bitcoin actually outperformed most cryptocurrency funds in the first half of 2023. This is because, between January and June, Bitcoin gained over 80% in value. 

Crypto funds, on the other hand, on the other hand, returned only about 15.2% profits on average. While still a positive return, it lagged far behind what regular Bitcoin investors made by just buying and sitting tight. 

21e6 Capital’s Crypto Fund Performance in H1 2023

According to a recently released report from Switzerland-based investment adviser 21e6 Capital AG, Bitcoin traders outperformed most crypto funds by 68.8% in H1.

This is not surprising, as BTC was one of the best-performing crypto assets in the first half of 2023, seeing massive gains from prospects of the SEC approving a Spot Bitcoin ETF. The price of Bitcoin started the year around $15,500 and climbed to over $31,400 in July.

Bitcoin outperforming crypto funds is relatively new, as crypto hedge funds are frequently able to outperform the BTC benchmark in the past significantly. But the crypto industry ended 2022 with more of a gloomy sentiment, as the market witnessed regulatory uncertainties and the collapse of FTX and Terra. 

This seems to have caused crypto hedge funds to take a safer approach, leaving them with larger-than-normal cash positions. When crypto is hot, that cash doesn’t appreciate like BTC would unless the funds’ assets perform significantly better than Bitcoin.

The report also noted that directional crypto funds generally outperformed non-directional crypto funds. Non-directional funds, like arbitrage, lending, and staking, do not depend on the market’s direction.

Bitcoin (BTC) price chart from Tradingview.com

Outlook for Second Half of 2023: More Gains Ahead for Bitcoin?

21e6 Capital’s latest report shows the general sentiment of the crypto market. Crypto funds had a rough first half of 2023, with many closing down early this year. About 13% of crypto hedge funds shut this year, as a few of them have struggled to present a favorable value proposition to potential investors.

The price of Bitcoin seems to be struggling to break over $30,000, but the outlook for Bitcoin in the second half of 2023 still looks positive. If approved, the price of Bitcoin is expected to spike further in the coming months as major investment companies start to offer Spot Bitcoin ETFs.

This influx of capital could spark a fresh bull market for all cryptocurrencies, leading to further gains for BTC holders. This new volume could see the price of BTC rise above $30,000 once more.

At the time of writing, BTC is trading at $29,043.

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Bitcoin Price Takes Deepest Dive Since 2020, Will BTC Bounce?

Suffering the effect of the current bloodbath in the crypto market, Bitcoin’s (BTC) price on May 12 hit its lowest valuation of $26,350 since December 2020. The ongoing bearish trend has remarkable similarity with the previous mid-season bearish trend that lasted from May to June 2021.

In both market crashes, Bitcoin’s price broke the resistance level of $30,000. Recently, it had dropped more than it reversed back in June 2021 when the BTC’s valuation stopped losing at $29,800. In contrast, its price in the current market clash has touched the $26,3000 level.

Related Reading | Dogecoin Has Dropped 90% Since “The Dogefather” Debuted On SNL

Several macroeconomic factors impacted the crypto market in both instances. For example, before 2021’s bearish trend, Chinese banks prevented using crypto by disallowing crypto services for the state’s financial sector. Then Elon Musk added fuel to the fire by reversing his decision to include Bitcoin for Tesla payments. Similarly, the distortion of COVID-19 caused some major countries to step back from the blockchain industry; thereby, the BTC price plummeted dramatically.

Likewise, in the most recent downtrend, geopolitical conditions and macroeconomic facts have decided the fate of Bitcoin. First, the Russia-Ukraine conflict immensely affected the crypto price, with regulators imposing strict rules day by day at a time when Bitcoin is starting to grow worldwide. Then legal ambiguity and Fed regulation of digital assets further plunged back Bitcoin price.

Bitcoin price struggles to hold $30,000 again. | Source: BTC/USD price chart from TradingView.com
Bitcoin Holders Rushed To Exit Their Assets

Crypto investors have been withdrawing their holdings after the recent slump, and many still hold on to losses and expect crypto prices will rock on again in the future. According to stats, 16,967,726 wallet addresses currently took losses and broke previous records. Crypto history has seen a similar peak on 19 Mach 2020.

The unusual behavior of the crypto market compelled investors to liquidate their assets, neglecting the losses they had taken. That’s why the figure for the following metric has decreased. Now, the number of crypto traders holdings 1K+ coins in their wallets has reached a low of 2,234, and most importantly, this figure was recorded on May 11.

Again, May 11 set a new record of transactions in the Bitcoin network as crypto holders rushed to exit their investments. It has reached a 4-year new high of traded volume with 175,146.8 BTC. The recent volume of committed transactions has eclipsed previous highs.

Related Reading | TA: Bitcoin Gains Momentum, Why Break Above $30K Is Crucial

Considering the present situation of the crypto market, the host of The Wolf of All Streets Podcast, Scott Melker, commented that “the entire market is reeling.”

He added:

I think that markets are in a full irrational panic. The pendulum has swung to extreme fear, as it always does. This causes people to sell assets at or near the bottom.

Featured image from Pixabay and chart from TradingView.com