Recent data from Glassnode, a blockchain analytics firm, indicates a notable decline in the percentage of Bitcoin’s circulating supply that has been inactive for at least one year. This percentage has dropped from 70% to 65.84% over the past three months.
As of the last report, around 65.84% of the 19.67m BTC circulating supply, which amounts to 12.95m BTC, has been dormant for over a year. This is the smallest percentage of the kind since October 2022. This pattern is a sign of the change in the dominant holding behavior throughout 2023.
The percentage of bitcoin's circulating supply that last moved on-chain at least a year ago has declined to the lowest since October 2022, according to data tracked by blockchain analytics firm Glassnode. Reporting by @godbole17.https://t.co/rRTLJNfouH
— CoinDesk (@CoinDesk) April 9, 2024
This drop also comes with a reduction in the supply of Bitcoins that have been dormant for two or more years. This index has decreased to 54%, from a level of 57.4% that was registered before. This change can be considered a change in investors’ investment behavior, from a long-term holding pattern to profit-taking, especially given the recent Bitcoin price appreciations.
Market Dynamics and the Recent Action with Bitcoin
The new holding pattern occurs in light of a considerable increase in the price of Bitcoin. Since April last year, the cryptocurrency has registered an impressive 148% surge, also more than 50% since several spot ETFs got introduced in the United States.
At press time, Bitcoin was trading at $69,071, per CoinMarketCap data. An increase in value could be making Bitcoin holders to take their profits.
Source: CoinMarketCap
The market has also seen an interesting shift in investor perception. The Crypto Fear and Greed Index, which is an informal indicator of the overall mood of the cryptocurrency market, has seen a big shift towards ‘Greed’.
April 9, saw the index hit 80 putting it in the category of ‘Extreme Greed’ after it grew from 76 of the previous day. It’s such a big leap from the beginning of the year, which was at 65 and hit a peak of 90 on March 5, the highest in two years.
Source: alternative.me
Arthur Hayes’ Perspective and Market Outlook
During these market shifts, Arthur Hayes, the co-founder of BitMEX, shared his thoughts regarding the future of the crypto market. According to a recent blog post dated April 8, the following Bitcoin halving, the monetary policies from the U.S. Federal Reserve and the Department of the Treasury may make a difference to the market, suggested Hayes. He expects the possibility of a halving to increase prices in the medium term but cautions regarding the possible negative effects during the period just before and right after.
Hayes also considered the impact of US fiscal policy on market liquidity. The last part of April will be difficult for high-risk assets, as factors such as U.S. tax payments and quantitative tightening by the Fed will impact them.
Nonetheless, after the Federal Reserve’s meeting on May 1, he anticipates moderation in the speed of money supply tightening and the release of liquidity from the Treasury’s general account, which will support the markets.
Despite his analysis, Hayes ends on a long-term positive note on cryptocurrencies and accepts the possibility of the market trend continuing up opposite to his bearish expectations. He also noted the cautious attitude to trading and that he waited until May, looking at market dynamics.
