On-chain data shows that inactive addresses are selling BTC, leading some analysts to make downward calls on Bitcoin’s price.
Veterans are selling their Bitcoin holdings (BTC), according to Glassnode’s Coin Dormancy metric. As shown below, inactive addresses selling BTC marked previous peaks in BTC.
Inactivity of Bitcoin coins. Source: glassnode
On-Chain analyst Willy Woo said that veterans reliably sold the spike to the most recent price cycle. He wrote:
„Inactivity is a measure of ‚veterans‘ selling. It is interesting to see veterans reliably selling spikes up to the present cycle. They sold the #bitcoin floor at USD 3k – USD 4k, they are selling right now“.
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There are several reasons why long-standing holders are selling BTC at the current price. BTC has tripled since March and is a decent profit area for sellers. The USD 12,000 area has also served as a strong resistance level over the past two months.
Will the inactive Bitcoin HODLers be proven right this time?
In addition to the various technical reasons, there are cyclical reasons that could encourage inactive Bitcoin holders to sell.
In the last two quarters, Bitcoin recorded negative returns. The tendency for BTC to underperform in the final quarter, coupled with the USD 12,000 resistance, could force holders to take profits.
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However, some technical analysts believe that Bitcoin is about to start a new cycle. In the coming months, BTC could continue to move towards higher resistance levels and not see a major reversal.
Filbfilb, a popular cryptomoney analyst, pointed to the post halving cycle seen in 2017. He said BTC reached a historic high after it exploded in the same week four years ago. He wrote:
„It is difficult to escape Bitcoin’s cyclical behaviour. In the same week four years ago, Bitcoin was trying to finally break the 50% decline in fibonacci in the bear market. He never looked back after that and proved a historic peak in January. Is this time different?“
The trader also noted that institutions apparently hold long positions in Bitcoin at record levels. Following the high-profile investments in Bitcoin by MicroStrategy and Square, institutional demand for BTC has risen sharply.
The volume of institution-specific platforms, including Bakkt and LMAX Digital, has increased substantially in recent weeks. Filb Filb added:
„Although they do not constitute a large part of the OI, institutional size traders only had long positions last week“.
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BTC’s technical configuration is bearish in the short term, but the fundamentals are sound
Most of the short-term bearish signals for Bitcoin are technical rather than fundamental. Several fundamental metrics mean a strengthening momentum, including the Bitcoin hashrate.
On October 19, the Bitcoin hashrate reached a new all-time record once again, which is a very optimistic trend, especially after the May 11 halving. John Todaro, a venture capitalist for crypto-currencies, said:
„Bitcoin’s hash rate reached new historic peaks (again). The recent price spike has increased mining revenues, leading more miners to allocate more resources to the network, thus increasing the hash rate. What happened to that thesis of the spiral of mining death after halving?“