Good morning. Here’s what’s happening:
Prices: Bitcoin was higher for a third straight day, changing hands around $41,500. But the headiest (and most ridiculous) crypto-markets action was in ApeCoin.
Insights: Bitcoin "minnows" might be small, but don't doubt their resolve.
Technician's take: There has been a loss of downside momentum on bitcoin's daily chart, which could keep short-term buyers active.
Bitcoin (BTC): $41,542 +0.5%
Ether (ETH): $3,092 -0.2%
Bitcoin holds $41,500 in mixed trading day for crypto, stocks
Indecisiveness ruled markets Wednesday as bitcoin flipped between gains and losses on the day and U.S. stocks ended the session mixed.
One thing that was clear: ApeCoin (APE) was pumping, though even that move was panned as ridiculous, entirely speculative and based on unconfirmed tweets.
Bitcoin was holding near the $41,500 price level after a three-day price increase of nearly $3,000. Analysts said the largest cryptocurrency by market capitalization was benefiting from optimism that a spot bitcoin exchange-traded fund might win approval from the U.S. Securities and Exchange Commission.
“I don't think there's any one major catalyst for price movement up or down right now,” Jason Deane, bitcoin market analyst at Quantum Economics, told CoinDesk's Angelique Chen.
S&P 500: -0.1%
Gold: $1,958 +0.1%
Research: Bitcoin Minnows Are Fierce Fish
After January’s price correction, which seemed dramatic by many standards but par for the course for crypto traders, bitcoin "minnows" (which we are calling those who hold 0.1-10 BTC) began accumulating crypto at record speed.
All the while, the number of wallets with a bitcoin balance of 100-1,000 declined, suggesting a sell-off by larger holders.
According to a new report from Glassnode, these "minnows" also have a fierce appetite for pain and are hodling their crypto through some intense volatility and price compression even though their coins have yet to experience a breakout.
For its part, Glassnode is defining long-term holders as those who bought before bitcoin’s all-time high in October 2021, while anyone who bought after that date is considered a short-term holder.
Those who bought after the all-time high – regardless of portfolio size – didn’t like the ride.
Glassnode points to a massive sell-off by those who bought at the top (short-term holders) at around $50K-$60K.
“What we can see is that the recent correction pushed a historically significant volume of LTH coins into an unrealized loss. This means that the amount of buying between August and November, which has now become underwater HODLing, is some of the most significant of all time,” Glassnode wrote.
Glassnode notes that investors who bought the top, those active between August 2021 and January 2022, have seen prices plunge beneath their cost basis and have dumped bitcoin, causing a “large-scale redistribution of the bitcoin supply to new hands.”
And these new hands aren’t necessarily long-term holders picking up additional supply.
At the same time, Glassnode observes that those who purchased bitcoin in the last week of January – the minnows – are still hodling.
“Much of the volume profile from [Jan. 22] remains intact. Despite an additional 2.5 months of sideways consolidation, a large proportion of the market appears unwilling to spend and sell their coins, even if their coins are held at a loss,” Glassnode wrote.
A big part of the bitcoin ethos is testing your faith, or conviction, in the asset class. Crypto has sustained immense periods of volatility, bear markets and a bull market as well, yet there still are investors willing to dive in.
“This correction has been historically significant, suggesting the confidence and conviction of bitcoin investors has been thoroughly tested,” Glassnode wrote. “What we have seen over the last [five] months is a 50%+ correction that appears to have significantly reshuffled the ownership structure of BTC. A great many long-term holders with coins above $50K appear completely unfazed, whilst others have been totally shaken out, at a historically significant rate.”
Some whales may have been shaken out but the minnows keep on swimming.
On intraday charts, however, BTC appears to be overbought, which could briefly stall the current upswing in price.
A series of higher price lows since Jan. 24 suggests continued buying interest around the $32,000-$37,500 support zone, which is the bottom of a year-long price range.
Still, the significant slowdown in BTC's long-term uptrend suggests upside could be limited over the next few months.
7:30 a.m. HKT/SGT(11:30 p.m. UTC): Japan National Consumer Price index (YoY/March)
5 p.m. HKT/SGT(9 a.m. UTC): Euro Area Harmonised Index of Consumer Prices (MoM/March)
8 p.m. HKT/SGT(12 p.m. UTC): International Monetary Fund continues Spring meetings.
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