Long-term Bitcoin holders are moving their coins to cold storage in anticipation of a price rise, a new analysis by cryptocurrency exchange Bitfinex has revealed.
This development is occuring despite Bitcoin having experienced a sharp sell-off over the weekend after Iran launched drones and other missiles towards Israel. The cryptocurrency which hit a new all-time high of $73,737.94 on 14th March is currently trading at $63,862, a drop of 13.6% from the ATH, and has lost 7.3% in the last 7 days.
However, according to Bitffinex, the recent sell-off correction was more a futures-driven move than a fundamental one.
“Friday and Saturday last week recorded the largest two day liquidations – at over $1.8 billion – in crypto history, but a key metric that emerged following the selldown was that funding rates in crypto perpetual markets neutralised, and even turned negative across a few altcoins, suggesting that this correction has been healthy and volatility may even reduce,” Bitffinex said.
“As the Bitcoin halving draws near—expected by Saturday April 20th—the amount of BTC leaving exchanges has hit its highest point since January 2023 last week. Simultaneously, the one-year-plus inactive supply, that is the total number of BTC that has not been moved in over 365 days has plummeted, this implies that the market is at a major inflection point.”
According to the report, there has been an observable shift in the makeup of the Bitcoin investor base, with new entrants (short-term holders or STHs) absorbing the supply sold by long-term holders (LTHs).
“If this dynamic of STHs absorbing LTH sell downs persists, then it could indicate room for further price growth.”
Bitcoin miners will have their rewards cut in half at the weekend, from 6.25 BTC to 3.125 BTC for each block they process. Historically, after each halving event, the price of Bitcoin has increased, although not always immediately.
EXPLAINER | The Most Anticipated Cryptocurrency Event of 2024, The #Bitcoin Halving, Explained
Through embedding a total supply and halving event directly into the Bitcoin code, the monetary system of Bitcoin becomes immutable and resistant to alteration.
This 'hard cap'… pic.twitter.com/cID1rPMS7J
— BitKE (@BitcoinKE) March 17, 2024
Following the most recent halving, which occurred on May 11, 2020, Bitcoin was priced at $8,500. The next year, the coin experienced a bull run hitting $69,044 by November 2021.
