Bitcoin: Why this trend could be key to BTC staying above $60k
Over the past week, Bitcoin has seen its price hike by close to 9 percent, with the crypto trading around $61k at press time. With the price still fairly close to its previous ATH, many expect further price discovery from the world’s largest cryptocurrency. However, this also fuels the question – Is it likely that BTC’s current buyers are going to give in and turn into sellers?
While BTC has seen tremendous bullish momentum over the past few months, the crypto has also had to deal with price corrections after previously established ATHs. For BTC, there continues to be the backing of committed hodlers, however, this hasn’t kept the price immune to short-term price corrections.
Interestingly, data provided by Glassnode pointed out that hodled coins are now maturing to reach long-term holder status. To add context to this, it is also important to take a look at BTC’s liquid supply change metric.
The Liquid position change metric shows the rate at which coins are crossing the liquid to illiquid threshold. This metric shows in red the coins that have been hodled and are not likely to be sold. After a particular threshold, however, the trend is reversed and coins are once again sold [shown in green].
According to the metric, a flip from illiquid to liquid last took place in December right when the 2017 ATH was breached as many traders felt that Bitcoin had reached its peak. The coming months and increased belief in the coin’s long-term prospects flipped this phenomenon leading to increased hodling. However, with BTC climbing to yet another high, will a trend reversal happen yet again?
Bitcoin HODLer Position Change can also provide context and clarity to the current market BTC finds itself in. The HODLer Position Change metric is currently trending higher and given the massive amounts of BTC that were bought by institutional investors in 2021 [provided they continue to hold on to the digital asset], this trend isn’t likely to change.
According to the data, there has been a drastic decrease in hodler spending right from the latter half of January 2021.
In addition to this, Glassnode’s Coin Years Destroyed (CYD) which tracks the number of coin-days destroyed over the last 365 days also provides a cyclical indicator to ascertain whether there has been spending or HODLing over the last year.
Interestingly, a high or an increase in CYD indicated that many old coins were spent in the last year and at present, the CYD is trending higher. However, this is only closer to the levels of 2013 when Bitcoin witnessed a strong price correction, with the same quite far from the 2017 top.
As Bitcoin tries to move beyond its current ATH and heads closer to the $65k-range, investors need to only worry about a price correction if there is a dramatic increase in hodler spending. Since this goes against the current trend, it is unlikely that many of the current market’s buyers will transform into sellers.
Hence, for the most part, traders are safe even as Bitcoin ventures into the $61k- $65k price bracket. This will be the case unless a whale-induced sell-off takes place.