In the latest analysis by CryptoQuant, the behavior and distribution of Bitcoin (BTC) holdings over a 2- to 3-year period have taken center stage. Historically, investors who weather the crypto storms for this duration tend to enjoy the most significant returns within a 4-year cycle.
The study delves into the Realized Cap-UTXO Age Bands (%), indicating that this specific cohort constitutes one-third of the total realized capitalization percentage across all age groups. Remarkably, this figure stands at 32.29%, the highest in history. This suggests a growing trend of investors adopting a long-term approach in the current period. Notably, during Bitcoin’s local peak in June 2019, the Realized Price within this cohort showcased significant profits, recording $1.2K compared to the market price of $11.9K.
However, despite the potential gains, the market price remains below the resistance zone, highlighting that investors who purchased BTC between January 2021 and now are still hovering near the break-even point. The analysis leverages NUPL data for this cohort, revealing a low risk of rapid distribution that could exert downward pressure on market prices, excluding the forthcoming ETF decision factor.
Bitcoin Correction to $32,000 After Spot ETF Approval
Simultaneously, CryptoQuant anticipates a potential correction in Bitcoin’s price, projecting a dip to as low as $32,000 in the next month, contingent on the approval of a spot ETF. The concept of a “sell the news” event is discussed, wherein prices tend to decline after a highly anticipated positive event. The rationale behind this phenomenon is that astute traders take advantage of the pre-event hype, prompting those with leverage to close positions as prices inevitably fall.
In the context of the ETF approval, perceived as a bullish event opening avenues for institutional investments, short-term Bitcoin holders are currently holding unrealized profits at a level historically preceding corrections. The note from CryptoQuant emphasizes that short-term holders are still spending Bitcoin at a profit, and market rallies usually follow once short-term losses are realized.
Capriole Investments advocates for a “conservative portfolio management” strategy leading up to the potential ETF approval, emphasizing the need for prudence in navigating the volatile cryptocurrency market. However, the market braces itself for potential fluctuations, and investors consider risk mitigation measures in their portfolios as the crypto community eagerly awaits the decision on the ETF.
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