Bitcoin's most steadfast holders have joined the current wave of cryptocurrency selling, a development that Compass Point suggests may signal the beginning of the end for the present crypto downturn.
In a report on Tuesday, Compass Point analyst Ed Engel noted that long-term holders, defined as those holding coins for at least 155 days (approximately five months), were largely inactive from February through April but have recently turned into sellers.
Engel stated that over the past two days, these holders have sold approximately $2.4 billion worth of Bitcoin, "which has a significant impact on Bitcoin's supply-demand balance."
He further emphasized that 26% of the Bitcoin sold in the past 30 days came from investors who purchased at prices above $90,000.
He added, "This cohort of high-price buyers has been resilient throughout the bear market, but as Bitcoin approaches new cycle lows, they have finally capitulated. Capitulation selling by high-price buyers is a very common theme in late-cycle bear markets. This reinforces our conviction that Bitcoin's bear market is in its later stages."
Bitcoin has struggled to reclaim its all-time high of over $126,000 from last October, as ongoing uncertainty surrounding US-Iran tensions continues to pressure prices. Meanwhile, stock markets have rallied to record highs. This divergence has led investors to question two dominant narratives for Bitcoin: that it should benefit from geopolitical uncertainty as "digital gold," and that it trades like a high-beta tech stock.
According to data from SoSoValue, Bitcoin ETFs experienced a net outflow for the 12th consecutive day on Tuesday, marking the longest streak of net outflows on record. The net asset value of Bitcoin ETFs has declined from $107.8 billion on May 14 to $85 billion.
Bitcoin is down 10% for the week so far, following a panic sell-off on Monday that triggered a cascade of long liquidations, exacerbating downward pressure. This sell-off was initiated after a firm named Strategy sold a small amount of 32 bitcoins.
However, analysts note that the sale by Strategy was not a major driver of Bitcoin's price.
Citi analyst Alex Saunders pointed out in a report, "ETF flows are the primary driver of Bitcoin price appreciation, explaining about 45% of weekly return variance, and are the best tool for tracking investor adoption and interest. Recent flows have been negative, while the odds of the US market structure bill (a potential catalyst in our view that could reignite investor interest) passing are declining."
He further added, "We expect market sentiment to remain subdued, especially against the backdrop of a still-visible divergence from equity market performance, unless there is positive regulatory news or the emergence of 'debasement trade' concerns around fiscal conditions."
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