- The main catalyst of the retracement was the higher-than-expected inflation data.
- LTH supply held in loss fell to 6.5%, paving way for distribution.
Bitcoin’s [BTC] stay at $50,000 was short-lived as developments in the last 24 hours caused a slight correction in price.
In fact, the king coin fell as low as $48,472 at around 5:15 pm UTC on the 13th of February before recovering to $49, 500 at press time, AMBCrypto discovered using CoinMarketCap data.
Fears over weak macroeconomic environment
The main catalyst of the retracement was the higher-than-expected U.S. Consumer Price Index (CPI) data, according to on-chain analytics firm Santiment.
The strong inflation ruled out possibilities of rate cuts in the near future. This in turn, dragged down risky markets like equities and cryptos.
For the curious, the the Federal Reserve uses CPI to gauge inflation in the U.S. and to calibrate its monetary policy.
Long-term holders’ profits jump
However, the minor correction shouldn’t let you ignore Bitcoin’s bullish surge lately. The world’s largest digital asset has shot up 127% over the last year and was trading just 28% lower than its all-time high as of this writing.
The result was that majority of investors were enjoying profits on their investments at press time.
Long-term holders (LTH), known for holding cryptos through multiple market cycles, saw a sharp decline in supply held in loss over the past 3-4 months, as per a report by blockchain research firm Glassnode.
As evident, only about 6.5% of the LTH supply was held in loss. Interestingly, these levels were last seen during early bull market conditions in mid-2020.
Source: Glassnode
It’s fairly well-known that LTHs accumulate through bear market conditions at losses. They then go for distribution in the early phases of bull market. And it appeared that they had already begun unloading their bags.
There was a sharp fall in LTH supply from the peak in November 2023. However, more than 50% of the outflows could be attributed to Grayscale Bitcoin Trust (GBTC) which also comes under the long-term holder label.
It would be interesting to track if LTH sell-offs pick pace as Bitcoin moves closer to the ATH of $69,000.
Source: Glassnode
Read BTC’s Price Prediction 2024-25
In a statement shared with AMBCrypto, Shivam Thakral, CEO of Indian cryptocurrency exchange BuyUcoin ruled out the likelihood of a continued rise in Bitcoin’s price in the short-term.
“The next few days could see a decrease in Bitcoin Dominance and the start of a bullish trend for Ethereum and altcoins. “
