Bitcoin Price Faces Bearish Risk As $1.7B in Dormant BTC Moves Over 2 Days

Key Takeaways:

• Dormant Bitcoin Movement: Over $1.7 billion worth of Bitcoin, inactive for up to three years, was recently moved on-chain, raising concerns about potential sell pressure in the market.
• Sell Pressure Concerns: The movement of long-dormant Bitcoin often signals possible selling activity, which could create downward pressure on Bitcoin price, particularly in times of low liquidity.
• Bullish Mid-Term Outlook: Despite the potential for short-term sell pressure, some crypto analysts, like Tony Sycamore of IG Markets, maintain a bullish mid-term outlook for Bitcoin price, expecting gains towards $70,000 due to improved macroeconomic conditions.
• Emerging HODLing Trend: A recent market report by Glassnode noted a preference for HODLing among Bitcoin holders, with large wallets, often associated with ETFs, returning to a regime of accumulation.
• Market Uncertainty: The overall crypto market is characterized by uncertainty, but the actions of long-term holders and large wallets will be crucial in determining Bitcoin price trajectory in the future.

The recent movement of $1.7 billion worth of “dormant” Bitcoin has raised concerns about potential downward pressure on the Bitcoin price. According to an on-chain analyst, the significant transfer of Bitcoin that had been inactive for several years could lead to increased selling pressure in the coming weeks. This article explores the details of these transactions, their potential impact on the market, and the contrasting perspectives of various analysts on Bitcoin price’s short- and mid-term prospects.

Dormant Bitcoin on the Move

Between August 11 and August 12, a total of 29,206 BTC that had been inactive for up to three years were moved on-chain. This movement was highlighted by a pseudonymous trader, XBTManager, who shared the details in an August 13 post on CryptoQuant. The majority of this dormant Bitcoin, 18,536 BTC, had been inactive for 2-3 years before being shifted on August 11, which created noticeable pressure on Bitcoin price. Later that day, an additional 5,684 BTC, which had been dormant for 3-6 months, were also moved.

Source: CryptoQuant

On the following day, August 12, more dormant Bitcoin was transferred. A total of 4,986 BTC that had been inactive for 3-12 months, along with 2,394 BTC that had been dormant for 3-5 years, were moved on-chain. The sudden activity of these long-dormant Bitcoin has raised concerns about the potential for increased selling pressure in the market.

Know More: Bitcoin Price Prediction

Potential Impact on Bitcoin Price

The movement of dormant Bitcoin often leads to increased selling pressure, particularly during times of low liquidity. When long-held Bitcoin is suddenly transferred, it can signal that holders may be preparing to sell, which can create downward pressure on prices. This potential sell-off could continue to affect Bitcoin price in the coming weeks, especially if liquidity remains low.

However, the impact of these movements is not entirely clear-cut. While some analysts are concerned about the potential for a price decline, others believe that the market may have already factored in this activity, or that it could be offset by other positive market trends.

Contrasting Analyst Perspectives

In contrast to the concerns about increased selling pressure, some analysts have offered a more optimistic outlook for Bitcoin price in the mid-term. Tony Sycamore, an analyst at IG Markets, provided a bullish perspective in an August 14 investment note. Sycamore highlighted the strengthening macroeconomic conditions following a recent $500 billion sell-off in the crypto market. He noted that Bitcoin had been “boosted by the continued improvement in risk sentiment and the sell-off in US yields” following cooler-than-expected US Producer Price Index (PPI) data.

Sycamore also pointed out that Bitcoin’s positioning had become “significantly cleaner” after the previous week’s false break below $50,000. He suggested that Bitcoin could extend its gains towards trend channel resistance near $70,000 in the sessions ahead, driven by improved risk sentiment and technical factors.

Market Uncertainty and HODLing Trend

Despite the optimistic outlook from some analysts, the overall market remains characterized by uncertainty. A market report published by Glassnode on August 13 highlighted this uncertainty but also noted an emerging preference for HODLing among market participants. Following Bitcoin price’s all-time high in March, the market experienced a period of extensive “supply distribution,” where funds were moved around frequently.

Large wallets have begun accumulating Bitcoin again. Source: Glassnode / CoinTelegraph

However, in recent weeks, there have been early signs of a reversal in this trend, particularly among large wallets often associated with exchange-traded funds (ETFs). These large wallets appear to be returning to a regime of accumulation, indicating a high level of conviction among long-term Bitcoin holders.

Conclusion

The recent movement of $1.7 billion in dormant Bitcoin has raised concerns about potential sell pressure in the market. While some analysts warn of a possible price decline due to increased selling activity, others remain optimistic about Bitcoin’s mid-term prospects, citing improved macroeconomic conditions and technical factors. As the market continues to navigate this period of uncertainty, the actions of long-term holders and large wallets will play a crucial role in determining Bitcoin price trajectory in the future.

Source: CoinTelegraph