Bitcoin’s price action over the past two weeks has once again demonstrated its volatile nature despite the steady flow of institutional money. The cryptocurrency rose in the last days of September from $53,500 to a high of $66,000, only to go back to $61,000 in the first days of October, showing its unpredictability.
Interestingly, Bitcoin’s rise to $66,000 led to: changing investment dynamics among cohorts of owners. Moreover, this change in dynamics shows that there is a reversal and retest after the rally not entirely bad news for the price of Bitcoin. In fact, this change suggests that the pullback could set the stage for a more resilient long-term price outlook for Bitcoin.
$66,000 Bitcoin Rejection
Bitcoin’s recent break above $66,000 last week led to its first higher high since June. This significant development of Bitcoin was noted by in a recent report, on-chain analytics platform Glassnode. Bitcoin, which initially made a higher low of $53,000 in September, eventually broke through the August high of $64,500. According to the report, the formation of this higher high led to a shift in the yields of short- and long-term cohorts of holders, with significantly more bitcoin crossing the long-term threshold.
In particular, during the recent rally, many coins were bought near the all-time high of $73,780, currently held for over 155 days. This, in turn, has resulted in many of these loss-making coins now becoming long-term holders. Although only 6.54% of long-term holders suffer losses, they account for 47.4% of all coins suffering losses. While this may not bode well for these long-term bond holders at the moment, Glassnode notes that this is actually common in phases of re-accumulationas was the case in 2013, 2019 and 2021. History shows that this has often led to price increases.
On the other hand, yields among short-term bondholders have improved significantly. Glassnode data shows that a significant number of coins that are still in the short-term cohort are priced between $53,000 and $66,000. Interestingly, the recent bull market has pushed the yield on short-term holder supply to over 62%. It is worth noting that the volume of profit taking is currently 14.17 times higher than that of loss taking. As a result, the financial pressure on short-term bondholders has now eased, and many now have an incentive to continue holding their bonds.
What’s next for Bitcoin?
Despite Bitcoin’s recent reversal at $66,000, the cryptocurrency is in a stronger and more profitable position for investors around the world compared to just a month ago. Moreover, the rejection of the $66,000 amount gave investors, especially long-term holders, another chance a chance to top up their farms.
At the time of writing, Bitcoin is trading at $61,200.
Featured image created with Dall.E, chart from Tradingview.com