Investors holding Bitcoin at a loss are contributing to a majority of the cryptocurrency’s exchange inflows, according to data from on-chain analytics firm Glassnode. The short-term holders are mostly contributing to these loss inflows, with most exchange inflows occurring when holders want to sell, indicating a selloff in the BTC market. However, Glassnode’s exchange inflow volume profit/loss bias metric tells us whether the inflows going to exchanges are coming from profit or loss holders. When this metric has a value greater than 1, it means the majority of the inflow volume contains coins that their holders have been carrying at a profit.
This article originally appeared on www.newsbtc.com
Bitcoin exchange inflows have been steadily increasing in recent weeks, leading many to believe that weak hands are exiting their positions and taking profits. The data seems to suggest that these inflows are primarily coming from loss holders who are either panicking or no longer believe in the long-term potential of Bitcoin.
Bitcoin, the world’s largest cryptocurrency by market cap, has been on a rollercoaster ride over the past few months. After reaching an all-time high of nearly $65,000 in mid-April, the cryptocurrency has experienced a sharp decline, with prices dropping to below $30,000 by mid-June.
As Bitcoin prices dropped, so did sentiment among some investors, and this has resulted in increased activity on exchanges. According to data from on-chain analytics firm Glassnode, nearly 40,000 Bitcoins have been sent to exchanges daily since the price decline began, with the majority being moved by long-term investors.
For some observers, this trend suggests that many investors who have been holding Bitcoin for a long time are now cashing out and taking profits. However, others believe that these movements may be driven by panic selling among less experienced investors, or weak hands, who are selling off their Bitcoin holdings at losses.
While it is difficult to determine the exact reason for these inflows, it does seem evident that many Bitcoin investors are currently cautious about the cryptocurrency’s future. Part of this caution may be attributed to the ongoing regulatory scrutiny of the crypto sector, as many governments around the world are increasingly introducing stricter rules for digital assets.
Another possible factor is the growing interest in alternative cryptocurrencies, such as Ethereum, which is currently the second-largest cryptocurrency by market cap. As Ethereum and other altcoins gain more attention and investor interest, some may be choosing to shift away from Bitcoin and diversify their portfolios.
In conclusion, while Bitcoin exchange inflows may indeed be coming from loss holders and weak hands, it is also possible that many investors are simply taking a cautious approach to the crypto market. With so many unknowns in the sector, including regulatory developments and the ongoing impact of the COVID-19 pandemic, it is no surprise that many investors are taking profits while they can. However, for those who believe in the long-term potential of Bitcoin, these temporary fluctuations may be seen as opportunities to accumulate more coins and hold on for the ride.