Bitcoin Long-Term Holders Sell Off in Response to Financial Sector Fallout

Blockchain intelligence provider, Glassnode, has published data on the selling behavior of Bitcoin’s long-term holders (LTHs). These investors, who have held Bitcoin for longer than six months and are considered the “smart money” of the ecosystem, typically buy Bitcoin during the price dips and sell during bull markets. However, LTHs do capitulate and sell Bitcoin when panic and fear occur in the market, as can be seen in Glassnode’s on-chain metrics.

Glassnode Data Shows Transfer Volume of Long-Term Holders to Exchanges

These metrics show that when LTHs sell Bitcoin to exchanges, considerable spikes happen during moments of fear and capitulation. Previous events that have caused this include the LUNA and FTX collapse, the China ban in May 2021, and now significant capitulation due to the fallout of Silvergate and Silicon Valley Bank.

Glassnode Data Indicates Transfer Volume of Long-Term Holders in Loss to Exchanges

The recent data shows that long-term holders have capitulated to levels similar to the FTX collapse, with roughly 10,000 Bitcoin being sent to exchanges and all sold at a loss. While capitulations, especially with long-term holders, can mark bottoms in Bitcoin cycles, the fallout and contagion from the banking and financial sector are still unknown, which will likely be short-term bearish for Bitcoin price action.

The selling patterns of long-term holders are an important factor to consider in understanding the current state of the Bitcoin market. While these investors are typically viewed as the smart money of the ecosystem, their selling patterns can also contribute to market volatility. As the fallout from the recent banking and financial sector issues continues to unfold, it will be interesting to see how this affects Bitcoin price action and the behavior of long-term holders.

BTC and ETH Funding Rates Drop to Multi-Month Lows, Indicating Cheaper Long Positions

In particular, it says that according to data from CryptoQuant, the funding rates for BTC have hit a 4-month low, which means that the cost of holding long positions in BTC futures contracts has decreased.

The Funding Rates for BTC Experience a 4-Month Low

Similarly, the funding rates for ETH have hit a 6-month low, indicating a decrease in the cost of holding long positions in ETH futures contracts.

The Funding Rates for ETH Experience a 6-Month Low

Funding rates are the fees that traders pay to hold long positions in futures contracts. When funding rates are high, it can be costly for traders to hold long positions for extended periods of time, which can put downward pressure on the price of the underlying asset. Conversely, when funding rates are low, it can be cheaper for traders to hold long positions, which can support the price of the asset. This could further weaken the market for a period of time.

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