Although the recent correction in the crypto market had quite a lasting effect, such circumstances have proven to be potentially profitable for long-term investors according to the Glassnode data analysis.
In particular, dormancy flow indicates that Bitcoin has reached the fourth oversold point in history. The current values indicate that most transactions occur in regards to short-term holders, while long-term holders continue accumulating Bitcoin. The empirical data confirms that the dormancy score of about 150,000 – 250,000 may illustrate the lowest point of correction with the high likelihood of a rapid Bitcoin price increase in the following weeks and months.
At the present moment, the dormancy score equals 200,000, thus maximizing the probability of the trend change in the near future. The above estimates are also supported by the proportion of Bitcoins owned by long-term holders that equals 76%, indicating the all-time high level.
Glassnode confirms that such a gap is the highest in Bitcoin history, implying the unprecedented concentration of cryptocurrency at the hands of long-term investors. Over 200,000 BTC have left exchanges since it reached the all-time high price of $69,000. This statistic may indicate the desire of many long-term investors to HODL their crypto funds off-exchange, prioritizing long-term over short-term investments.
The entity-adjusted dormancy flow also illustrates new buying opportunities that may be effectively pursued by long-term investors in their expectations of a new cycle of Bitcoin’s price increase. Whales recognize additional opportunities associated with the observed decline in Bitcoin price, and they continue accumulating additional crypto reserves, while short-term investors tend to liquidate their positions.
MicroStrategy is a relevant example of whales that continue investing millions of dollars in BTC to reduce the average price level of their holdings. The presence of a considerable demand within the range of $30,000-$40,000 from long-term investors may create a basis for the subsequent rapid price increase in the following months.
The continuing investments made by whales confirm their positive assessment of the crypto market dynamics in the long run. Even if the recent market correction within the existing price range persists, long-term investors are expected to continue accumulating Bitcoin, thus further increasing the gap between long- and short-term investors.
Under such conditions, the reverse in the Bitcoin market trend appears to be almost inevitable as short-term investors will be attracted to the sector as long as the market changes its direction and BTC price starts to increase. While positive long-term assessments of BTC prices appear to be well-supported, some uncertainty regarding short-term price fluctuations still exists.
