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Bitcoin Suffers Worst Month since 2011, Underlying Support Grows

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This last June saw BTC perform at its worst since 2011, however there are some indications of underlying support growing stronger over time. Traversing the bear markets can be painful, but especially so for the month of June which saw a fall of 37.9% for Bitcoin BTC. 

The resulting behavior of many so-called Bitcoin “ tourists” have now withdrawn their bitcoin, leaving mainly the dedicated investors in the space.  In spite of the struggles Bitcoin has been facing, as well as the market in general experiencing some of the worst market behavior in history, several indicators suggest that the outlook may not be as dire as some might predict. 

A major sell-off event has occurred, relieving many active Bitcoin wallets. This is a common occurrence during these times as well as during the early bear market periods. While this typically is not a good sign, market Analytics platforms like Glassnode have suggested that “there is an increasing level of resolve amongst the average Bitcoin participant,” in relation to a smaller demographic of people purging their wallets in times like this since 2018. 

Only 1% of Bitcoin addresses have purged their holdings completely which is a big improvement as the last bearish period saw a 2.8% exodus in April and May 2021. In 2018, 24% of active bitcoin wallets purged their holdings.  This data suggests that people are holding strong on their investments. 

The most dedicated Bitcoin investors continue to hold the line even while the on-chain activity for Bitcoin remains in  bear-market territory. 

The “not your keys, not your crypto” is gaining traction once again while traders have withdrawn many of their tokens from exchanges at a heightened rate. The Terra collapse and the implosion of Three Arrows Capital have brought the community back to the idea that crypto assets are meant to be in cold storage. 

March 2020 saw the beginning of a number of Bitcoin exchanges declining from 3.15 million to 2.4 million BTC. The outflow of BTC has reached nearly 750,000, almost 150,000 of them occurring within the last 3 months. 

With the Celsius platforms halting of withdrawals and the limitations put on by many other smaller exchanges, the desire to return personal control of assets is strengthening. 

This can be seen as a positive in the long term with increased likelihood of capitulation decreases when assets are locked in cold storage rather than being readily available for withdrawal on exchanges. 

There has been an increasing interest from Bitcoin wallets holding less than 1 BTC, most likely representing the retail cohort of the crypto market.  Called “Shrimp” wallets, they have been scavenging low-priced BTC, around 60,460 per month according to Glassnode. This has been deemed “the most aggressive rate in history.”

The rising interesting in smaller buyers, increased dedication of BTC holders during the bearish market have been strong indicators that the calls for the “death of Bitcoin” are premature.

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