Bitcoin Prices Retrace as Traders With Varying Time Horizons Jockey for Position

Longer term holders remain resilient. Bitcoin super whales warrant attention, as they have recently reduced positions.

AccessTimeIconMay 11, 2023 at 9:24 p.m. UTC

Bitcoin prices tumbled in Thursday trading, as markets seemed to discount the sort of encouraging inflation and employment data that has juiced prices repeatedly in recent months.

For now, investors seem more concerned about banking and other macroeconomic uncertainties.

On Thursday Producer prices (PPI) rose 0.2% month-over-month, beating consensus expectations of a 0.3% increase. Initial jobless claims in the U.S. rose to 264,000 for the week ending May 6, the highest since October, and surpassing expectations of 245,000.

In the current economic environment, weaker jobs data has generally been a boon for risk-on asset prices, suggesting that the hot jobs market is cooling and that the Federal Open Market Committee (FOMC) may be able to end its hotly criticized streak of interest rate hikes. Concerns about high employment as a stimulus for strong economic growth and inflation have at times weighed heavily on asset markets

Despite this seemingly positive economic news, short-term sentiment in crypto markets has shown signs of uncertainty.

CoinDesk’s Bitcoin Trend Indicator has moved from “uptrend” to “neutral” as bullish sentiment has begun to wane. Part of BTI’s methodology involves the comparison of moving averages (MA), and their proximity to each other, specifically as one crosses above or below the other.

For instance, BTC’s recent price action shows that its two-day moving average has crossed below the 10-day moving average. The same holds true for BTC’s five- and 20-day moving averages, highlighting the recent downtrend in bitcoin markets. This development has contributed to the indicator’s shift to neutral.

Bitcoin Trend Indicator 5/11/23 (CoinDesk)

The downtrend coincides with an uptick in short-term holders in losing positions sending coins to exchanges.

Rising coin flows to exchanges are usually bearish, as they suggest investors are looking to liquidate the assets. Short-term means that investors have held their BTC for less than 155 days.

Short-term bitcoin holders have transferred 14,800 BTC to exchanges, while long-term holders have sent 523. Meanwhile, the volume of BTC sent to exchanges by long-term holders in losing positions has declined.

As is often the case, the sentiment of investors with shorter and longer term horizons have diverged. At the moment, the bearish sentiment of short-term holders appears to be driving the overall market narrative.

The other group worth monitoring, however, is whales (i.e. unique entities holding more than 1,000 BTC).

In the aggregate, whales are removing coins from exchanges. This trend suggests bullishness. However, among whales with at least 100,000 bitcoin, their overall supply increased 2.5% between March and May, but has been declining since May 1.

BTC Supply Held by Entities with Balance > 100k (Glassnode)

All told, the recent combination of factors has increased uncertainty in markets. While long- term holders appear to have strong conviction, the activity of short-term holders warrants monitoring, particularly those with large overall positions.

Edited by James Rubin.


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Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX