Since Bitcoin [BTC] plummeted from a high of $29,703 on 5 May to $27,333 on 8 May, there has been a lot of speculation in the market. Despite trading 0.65% higher in the last 24 hours, BTC’s seven-day performance remained negative at press time.
The decline of BTC could be a strong indicator of widespread selling activity in the market. According to the CryptoQuant researcher onchained, short-term holders may be too accountable for BTC’s negative trend.
According to the CryptoQuant analyst, analyzing Exchange Inflow Spent Outputs Age Bands (%) reveals which holders impact the price of BTC. The reduction in BTC from $31k to 27k was caused by an increase in BTC inflow into exchanges. According to Onchained, between November and January, 58.33% of spent outputs were moved to exchanges.
These holdings were purchased between $15,400 and $18,300 and held for 3 to 6 months. Furthermore, these holdings accounted for a sizable amount of the expenditure output.
Furthermore, the second biggest age group that transferred their BTC to exchanges kept it for between a day and a week. This age group accounted for 10.27% of total outputs.
Long-term holders, in contrast to short-term investors, took a distinct path, according to the data. Long-term holders, as seen below, did not contribute significantly to spending outputs.
Spend output for holders aged 6 to 12 months was 0.38%, while spend output for holders aged 12 to 18 months was 0.12%. Furthermore, expenditure outputs for holders with 2 to 3 years stood at 0.3% and 0.444% for holders with 3 to 5 years.
On May 10, the king of cryptocurrencies fell from $28,221 to $26,996 in a matter of minutes. This market fear and FUD could be the result of bogus news about the US government selling its shares. The now-deleted tweet from @1kbeetlejuice, a crypto analyst, indicated that the US government had liquidated its BTC holdings. The analyst explained the issue that caused the panic in a thread.
Furthermore, it was demonstrated that the US government made no adjustments to its holdings as of May 10. Regarding the recent FUD, BTC has managed to recover and was trading up by 0.34% in the last hour at press time. However, this does not absolve BTC of all responsibility. BTC’s four-hour chart showed that its Relative Strength Index (RSI) was 39.99.
What was more concerning was that it was in freefall and would continue to fall in the face of continued sell pressure. Furthermore, while the MACD line (blue) was heading above the signal line (red) at the time of publication, it could alter direction. At the time of writing, BTC’s Chaikin Money Flow (CMF) was also 0.00.
Given the fragile position of short-term traders, as well as the market panic, BTC’s position could be precarious. According to a tweet from crypto trader Ash Crypto, the latest market FUD could have resulted in a considerable number of tiny traders being wiped out.