Today Bitcoin is trading at $38,500. The trend of the coin market collapse is evident on the daily chart of BTC, where its November record of 69 thousand is still visible. However, the first cryptocurrency now seems relatively stable as it moves in a relatively narrow price channel.

Daily chart of Bitcoin exchange rate

Investors are actively taking advantage of this, buying BTC and moving the coins out of cryptocurrency exchanges. This is evident from Glassnode data, which compares the collapse phase of the cryptocurrency market from May to July 2021 (A) and the current period of subsidence, which began in November 2021 (B). For convenience, these stages are highlighted with red rectangles.

Comparison of Bitcoin’s spring-summer 2021 and current decline phases

You can see here that the spring-summer collapse period was accompanied by almost non-stop bitcoin inflows to cryptocurrency exchanges, which is indicated by the green bars. Typically, cryptocurrencies are brought onto exchanges for the sake of selling – and this indicates a negative investor sentiment.

Now, however, the market is seeing active BTC withdrawals, indicating that many investors believe in the first cryptocurrency’s growth prospects. They are essentially buying up assets and withdrawing them into third-party wallets for the sake of long-term storage. And that’s a significant difference compared to the previous period of collapse.

What’s happening to Bitcoin

Glassnode experts note another positive trend in the niche. According to their information, the so-called hodgepodge is now one of the most popular trading strategies among cryptocurrency investors. This version is confirmed by the gradual transformation of short-term BTC holders into long-term ones.

As noted by experts, the number of short-term bitcoin holders – that is, addresses that hold BTC for less than 155 days – decreased significantly the day before. However, the reason for this was not the massive sale of coins amid a market collapse, which is quite common for new investors. According to analysts, such declines “are only possible when most of the supply of coins is dormant and crosses the aforementioned 155-day threshold”. Thus, this cryptocurrency automatically becomes a long-term BTC investor, Cointelegraph reports.


In other words, more and more investors are now willing to hold their bitcoins, despite the general trend of a weaker market. And that's good news, as they aren't creating pressure on the BTC exchange rate at the expense of possible selling. Consequently, Bitcoin remains at a relatively stable price level, which attracts the attention of new market participants. This creates the conditions for a recovery in the exchange rate.


According to analysts, sellers’ pressure on BTC remains fairly stable, which does not correspond to the beginning of a so-called bear market. On top of that, 75 per cent of all bitcoins in circulation have not moved for at least six months, which also indicates investor confidence in the main digital asset.

CoinGecko experts note another curious feature of the market. According to their information, the current state of the niche continues to be characterised as quite “strong”. The fact is that since the fall of BTC from $58,000 to $34,000 in May, the network has not seen significant capitulation, that is, large-scale sales of the cryptocurrency by investors at a loss.

And while the Bitcoin market has indeed been in an accumulation phase since May 2021, the situation now seems different because of the notable withdrawals of BTC from exchanges.

The Bitcoin market is now both in and out of accretion and distribution

What is particularly interesting: most short-term Bitcoin holders at 82 percent are holding the cryptocurrency in the negative. Typically, this kind of investor behaviour would characterise the end of a falling trend, as BTC buying indicated buyer faith and at the same time moved the cryptocurrency’s exchange rate upwards.

Short-term investors hold bitcoins at a loss

That said, Bitcoin is clearly set to become more popular going forward. This is evidenced by a recent Deloitte report, which highlighted the advantages of the first cryptocurrency. According to the experts, BTC will be “the basis for a cheaper, faster and safer ecosystem for the electronic version of central banks’ fiat currencies,” also known by the acronym CBDC.

Overall, the report highlighted five key areas where Bitcoin has real potential to help the traditional system of finance. These are speed, security, transaction efficiency, international payments and interaction with other parties in remittances. Here’s a relevant rejoinder from the experts.

Given the ability to conduct the day-to-day transactions that a centralised organisation – be it commercial or federal – needs, the result could be truly transformational.

Bitcoin versus the dollar


We believe that the current trend in the cryptocurrency niche could be a consequence of the massive popularisation of digital assets. After all, they are now more popular than ever, and Bitcoin is even recognised as official tender in El Salvador. With this in mind, we can say that investors will use any possible market downturn to fill up their coin holdings, because they are confident about BTC's future. Well, this, in turn, creates good conditions for further development of cryptocurrencies and attracting new niche participants.


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