IntoTheBlock provides insights into the unexpected downturn in Bitcoin’s market, particularly following the approval of the Bitcoin ETF.
Data shared in a Jan. 19 X post by blockchain analytics firm IntoTheBlock shows that Bitcoin (BTC) prices have decreased by approximately 10% in the past week, a trend that contradicts many market predictions. The firm’s analysis reveals several key factors contributing to this trend.
There has been a significant increase in Bitcoin inflows into centralized exchanges for the past six weeks, with nearly $2 billion in net deposits since December. This pattern of high exchange deposits typically indicates a selling trend, prompting the question of who is selling and why.
IntoTheBlock also noted the movement of older Bitcoin, which recently saw an all-time high in average holding time before transacting. This trend was particularly pronounced on Monday and suggests that long-term holders, potentially those invested in the Grayscale Bitcoin Trust (GBTC), are beginning to move their assets, possibly indicating a sell-off.
Further analysis shows a shift in Bitcoin holdings across various wallet sizes. Wallets with more than 1,000 BTC have increased their holdings in January, while those holding fewer than 1,000 BTC have reduced their holdings. This change is primarily seen in wallets that have held Bitcoin for a period ranging from the previous month to the last 12 months.
Additionally, long-term Bitcoin holders have slightly reduced their overall holdings, deviating from the typical accumulation pattern in previous months. In contrast, short-term traders have noticed a noticeable increase in Bitcoin holdings since October 2023, a trend often associated with bull markets. However, this shift from long-term to short-term holders can sometimes signal market tops.
Despite these trends, the overall picture of Bitcoin’s market is not entirely bearish. The current situation is characterized by a lack of trading volume compared to previous bull markets. Moreover, the minimal decrease in the balance of long-term holders and a relatively modest Market Value to Realized Value (MVRV) ratio of 1.88 suggests that Bitcoin might be experiencing a temporary setback rather than entering a significant bear market.
