Bitcoin‘s price volatility is at historically low levels, with on-chain data hinting that this stability may be due to the supply held by long-term holders. Nonetheless, a record profit of $9.07 billion by short-term whales suggests a looming increase in selling pressure.
How Important is Investor Structure?
On-chain analytics firm Glassnode shared via X on September 8, highlighting the strong connection between long-term investor supply and changes in Bitcoin’s realized volatility. The firm’s analysis demonstrated that this factor explains around 19-20% of the shifts in volatility. Comparatively, illiquid supply and activity indicators explained 12% and 11.5% respectively.
Short-Term Whales’ Profits: A Cause for Concern?
Even with the market’s current calm, short-term large investors are experiencing a surge in profits. According to CryptoQuant, short-term Bitcoin whales have reached a record profit level of $9.07 billion. This increase could heighten the probability of profit-taking sales, making the potential actions of short-term whales a significant aspect to watch alongside the effects of long-term holders on volatility.
The reduced available supply for trade due to long-term holders leads to restricted price movements. However, this quiet may not last indefinitely. Should these long-term investors decide to sell, or if the previously illiquid supply returns to circulation, volatility could rapidly spike.
- Glassnode reveals the outsized impact of long-term holders on Bitcoin’s volatility.
- Stablecoins and market cap wield minimal explanatory power over volatility.
- Short-term whale profits could prompt potential market sell-offs.
- Current market conditions marked by decreased trading liquidity and price swings.
Current developments indicate an increase in the share of Bitcoins held for over six months, yet this shift does not confirm an immediate market trend reversal. Analyst Darkfost asserts that the gradual shift of these coins into long-term holdings is part of a broader market bottom formation, not a sign of an imminent pivot in market dynamics.
