Who throws away their coins, how many and why?

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The Bitcoin market has been tepid over the past two weeks. The undisputed ruler of the cryptocurrency world, Bitcoin, has taken the brunt of the chilly by experiencing it worst weekly runoff in three months according to the latest report from Coinshares, a digital asset investing company, at a staggering $621 million. This isn’t just about the Bitcoin chilly; the entire market is going through a collective shiver and immense outflows are affecting all assets.

Bitcoin: Investor confidence takes a break from hibernation

Investor sentiment has turned negative sharply, with many of them withdrawing from fixed-supply assets such as Bitcoin. The United States seems to be leading the exodus, with an outflow of as much as $565 million from the country, according to Coinshares. This negative situation is reflected in the trading volume, which decreased by 50% compared to the annual average.

Source: CoinShares

Naturally, there are whispers about whether this means the end of the long-awaited cryptocurrency bull market. However, some analysts, such as Rekt Capital, see a potential spring awakening in these seemingly challenging conditions. They argue that this period of consolidation, while painful in the compact term, may be necessary for a well, long-term bull run.

Rewriting the Crypto Playbook?

Rekt Capital shows similarities with previous post-halving cycles where Bitcoin did not experience a significant breakout so early. They propose that rapid growth at the beginning may lead to a shorter-than-usual bull market.

In their view, the current phase of consolidation, as evidenced by Coinshares data, is a necessary reset button, allowing the market to re-sync with the conventional halving cycle and pave the way for a “normal, regular bull market.” This perspective suggests that the current economic downturn may be a strategic pause rather than a complete collapse.

BTCUSD trading at $65,492 on the daily chart: TradingView.com

Coinshares further stated that the withdrawals were concentrated in the US, leading to outflows of $565 million. This was likely due to investors trying to limit their exposure to fixed-supply assets. Other areas that saw $24 million, $15 million and $15 million respectively were Switzerland, Canada and Sweden with negative sentiment.

Bitcoin down in the last 24 hours. Source: Coingecko

Cryptocurrency: a market subject to constant change

Although Rekt Capital’s analysis provides a ray of hope, the near future remains uncertain. Bitcoin is currently almost 15% below its all-time high, a stark reminder of the market’s volatility. Despite the overall crisis, some altcoins have managed to buck the trend, offering a glimpse of defiance in the face of the broader market chill.

Significant outflows and price declines, according to Coinshares, paint a picture of a cautious market. Whether this is a ephemeral setback or a sign of a longer crypto winter will depend on a variety of factors, including future actions by the Federal Reserve and the broader economic climate.

Featured image from Valley Sleep Center, chart from TradingView


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