The accumulation volumes of Bitcoin have reached a new high. Last week marked a record net outflow from exchange-traded funds (ETFs) totaling $942 million, with Bitcoin accounting for 96% of it. Analysts, reported on the overbought status of the cryptocurrency and the risk of continued correction. The outflow of investors was compounded by the desire of long-term holders, whales, and miners to lock in profits in March after the price reached a new record.
However, according to analytics of S1 Production, by the end of last week, sentiment sharply shifted, with crypto funds continuing to show a net outflow, while cryptocurrency exchanges faced an increase in coin withdrawals to cold wallets. This is one of the signs of market participants’ reluctance to part with coins at current prices.
For instance, outflows from Coinbase accelerated sharply in March, reducing the exchange’s reserves to 344.9 thousand BTC (excluding institutional assets). This level is reminiscent of 2015. Overall reserves across all cryptocurrency exchanges also turned downwards after an early-month increase, with the current figure standing at 1.98 million BTC. However, the most pronounced hodling behavior was observed in accumulation addresses, setting a record influx on March 22 at 25.3 thousand BTC. Signs of accumulation addresses (excluding miner and exchange addresses) include:
- Lack of outgoing transactions;
- More than two incoming transactions;
- Last activity no later than seven years ago;
- Balance exceeding 10 BTC.
Breaking it down by cohorts, whales and sharks have returned to accumulating Bitcoin. Conversely, stablecoins have seen a significant loss of reserves on their part. In February, a significant influx of funds into spot ETFs gave impetus to the price, which waned by mid-March. However, there was no significant sell-off, as other market participants quickly shifted from profit-taking to accumulation of coins. Despite the “premature” attainment of the historical price peak, the majority of crypto enthusiasts assess the likelihood of further growth as high. Anthony Scaramucci, the founder of Skybridge Capital, offered investors an interesting piece of advice on dealing with price fluctuations: “Behave as if you were dead, and do not sell Bitcoin.”
CONCLUSION
In conclusion, the recent surge in Bitcoin accumulation, coupled with the record net outflow from exchange-traded funds (ETFs), reflects a dynamic market landscape characterized by shifting sentiments and strategic moves by various market participants. While initial concerns over an overbought status and potential corrections were raised by analysts, the recent behavior of investors, including long-term holders and institutional players, suggests a growing confidence in Bitcoin’s long-term potential.
In navigating these price fluctuations, Anthony Scaramucci’s advice to “behave as if you were dead, and do not sell Bitcoin” reflects a broader sentiment among investors to adopt a long-term perspective and hold onto their assets amidst market volatility. As the cryptocurrency landscape continues to evolve, these insights into market dynamics and sentiment shifts provide valuable considerations for investors navigating the digital asset space.
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