- Bitcoin’s dominance has increased from 38% in 2022 to 56%, largely due to the accumulation of long-term holders.
- Short-term investors are left with unrealized losses, where an overreaction will undoubtedly cause further declines.
Bitcoin [BTC] continues to dominate the cryptocurrency market, accounting for more than half of the $2.1 trillion global crypto market capitalization.
According to the on-chain analytics platform Glass junctionSince the crypto market hit the bottom of the cycle in November 2022, BTC’s dominance has grown from 38% to 56%.
On the other hand, Ethereum [ETH] Dominance has remained relatively flat over the past two years, while altcoins have also lost 6.5% of their market share.
Long-term holders ensure Bitcoin’s dominance
According to Glassnode, Bitcoin’s growth comes amid an increase in capital inflows into the asset as long-term holders show diamond hands.
The supply of Bitcoin among these traders has increased significantly. The report noted that the majority of these traders became long-term holders after purchasing BTC near its all-time high in March.
“Despite the choppy and choppy price action, the resolve of long-term holders remains firm, with a clear preference for HODL and acquiring coins,” Glassnode said.
These holders have a profit of approximately $138 million per day. This increases risk on the sell side, but profit-taking activity has cooled.
This observation is further reinforced by data from CryptoQuant showing that after intense profit-taking by whales in May and July, the Exchange Whale Ratio is now declining.
Furthermore, buyers appear to be absorbing the coins sold, which explains why Bitcoin’s price has remained range-bound in recent months since its ATH value dropped.
Short-term holders caused a $50,000 dip
Glassnode also argued that an “overreaction” from short-term holders caused Bitcoin’s drop below $50,000 earlier this month.
The market value to realized value ratio (MVRV) for the short-term holder is below 1, indicating that these investors are suffering unrealized losses. This ratio has been below the equilibrium point for the past 30 days.
Unlike long-term holders, short-term Bitcoin holders are much more reactive to price movements, with their responses lagging behind local tops or bottoms, according to Glassnode. This is what happened on August 5 when BTC crashed to a multi-month low at $49,000.
Read Bitcoin’s [BTC] Price forecast 2024-25
If these investors continue to suffer losses below $59,000 for extended periods, the analysts say it will increase the likelihood of market panic and serious bearish momentum.
A look at leveraged trading indicates a slight shift to the bullish side. The long/short ratio is on Mint glass showed a gradual increase in long positions since August 18.