Cryptocurrency market is in the largest drawdown of the current cycle for over a year, as per the blockchain analytics company Glassnode. However, there are signs of incoming long-term players who intend to keep their stocks, meaning that the population is gradually becoming more patient with constant fluctuation. This contribution outlines some of the lessons obtained from the current bout of bear market by Glassnode in its report dated August 13, 2021.
Crypto Downtrend Hits New Low, Yet Long-Term Investors Remain Resilient
This is marked as the largest downtrend of the cycle and has described the crypto market as being in a bear market for over a year now with Bitcoin and other major cryptocurrencies being under immense sell-side pressure. The recurring bearish trend in the crypto market has resulted to a decline in market price of various coins inclusive to Bitcoins which has failed to hold above fundamental support levels.
But Glassnode data shows that even during such market conditions, the long-term holder (LTH) is not disposing of their bitcoin. The report asserts that the Accumulation Trend Score, which tracks market-wide accumulation behaviours, has grown to a total percentage position of one hundred percent, thereby attaining its theoretical maximum value 1.0. This score suggest that, as with the previous fall in the price of Bitcoin, investors are actively buying the cryptocurrency.
“The accumulation of Bitcoin by long-term holders is a positive sign for the market,” said a Glassnode analyst in the report. “It shows that these investors have a strong belief in the future potential of the asset, despite the current downtrend.”
Bitcoin Price Stability Amid Sell-Offs Signals Strong Market Sentiment
Nevertheless, Bitcoin sell-offs have been escalating since April up to July, although the price per Bitcoin has only been around $60000. Glassnode’s statistics show such stability as the strength in the market, even during the biggest downtrend of the cycle. For instance, the Spot Cumulative Volume Delta (CVD), which measures the disparity of buying and selling in the entire market, has a negative value, illustrating that sell-side pressure has been dominant.
On the other hand, the LTH Sell-Side Risk ratio or the risk that long-term holders will offload their stock holdings, still stays below the previous market cycles level. This shows that the long-term holders are not compelled to sell the cryptocurrencies even though the crypto market continues to decline.
In the same report from Glassnode , profit-taking by long-term holders has only been moderate compared to pervious market cycles meaning that these investors are only waiting for higher prices so as to start practically selling their stakes , but this is a very patient like investment style.
Shifting Investor Behavior in Response to Prolonged Downtrend
In fact, they have not stopped banking their invested funds, as fears over continued declining crypto market continues to define investors behavior. Contrary to previous cycles, in which investors sold off their stocks whenever market slumps occurred, several investors use the ‘hodling’ approach where the investments are held for the long term, even with wavering market prices.
The report of Glassnode also exhibits that this trend of holding is getting strengthen with long-term investors. Functional investments As much as 374000 BTC have been bought by long-term holder over the last three months which attest to their continued investment in the asset.
“The current market environment is testing the resolve of investors,” Glassnode stated. “But the data shows that a significant portion of the market is committed to holding onto their assets, even as prices continue to decline.”
Final Takeaway
With the current cryptocurrency market showing its largest decline in over a year the strength of the long-term holding is now beginning to be seen. Nevertheless, these investors remain patient maintaining their holdings despite the market sentiment has been on sell side and negative for quite a long time, they still believe in the image of cryptocurrencies. For the current cycle, this is still true but Glassnode points out that such behavior may be indicative of a more mature market in the future.
The crypto downtrend could persist much longer simply because it will always remain as a primary test to the strength and patience of the market, but the increasing trend on long term holding say a lot about the fact that investors are more inclined to long term holding than getting carried away by short term volatility. While doing so, patience and resilience may become the golden rule which will help to survive in the storm and become a winner afterward. Keep following Deythere for latest updates on crypto market.
