Bitcoin Mid-Term Holders Are Selling, Behind The Price Drop?
On-chain data shows that Bitcoin’s “medium-term holders” are selling, which may explain why the price has dropped recently.
Medium-term Bitcoin Holders Are Losing Their Supply Recently
As pointed out by an analyst in a CryptoQuant post, a group of holders have been showing signs of profit-taking recently. The indicator of interest here is the “summed coin age distribution”, which tells us about how the supply of Bitcoin is currently distributed among the various cohorts.
These cohorts are divided based on the age of the coins they are currently holding in their wallets. The 1-3 months group, for example, contains all holders who have been carrying their coins for at least 1 month and at most 3 months ago.
In the context of the current topic, the relevant coin age range is the one where investors hold their coins between 3 and 6 months ago. These investors are sometimes referred to as “medium-term holders” since their range falls into the boundary of “short-term holders” (STHs) and “long-term holders” (LTHs).
STHs and LTHs make up the two main sections that the Bitcoin market is usually divided into, and the boundary between the two is whether the coins have aged 155 days or not. Naturally, coins aged less than 155 days fall into the first group, while those older than 155 days are included in the second.
Here is a graph that shows the trend in coin age distribution for this specific cohort:
Looks like the value of the metric has been declining in recent days | Source: CryptoQuant
As displayed in the chart above, Bitcoin’s sum coin age distribution for the 3-6 month group started to rise when the rally started in January of this year.
This increase in the indicator continued until quite recently, implying that holders belonging to this cohort accumulated more cryptocurrencies during this period.
After peaking earlier this month, however, the metric has started to drop sharply, suggesting that this cohort has started to sell off its holdings.
When medium-term holders started selling off, the asset’s price was still fluctuating between the $28,000 and $29,000 levels. As these holders acquired their coins at least 3 months ago when prices were notably lower, this entire cohort likely made some significant profits at these price levels.
After this 3-6 month group profit wave, Bitcoin price has seen a drop and has now dropped below the $27,000 level.
So far, supply from medium-term holders has continued to drop, so it might appear that their selling hasn’t stopped yet. This could provide an explanation behind the recent struggle the asset’s value has had, as the coin has only been able to move sideways in recent days.
At the time of writing, Bitcoin is trading around $26,500, down 1% over the past week.
BTC has plunged over the past day | Source: BTCUSD on TradingView
Featured Image from iStock.com, Charts from TradingView.com, CryptoQuant.com