Bitcoin’s price movement over the past two weeks has been a major source of concern as the coin’s value continues to drift (now down about 15%) from its all-time high. As the flagship cryptocurrency slows down, the latest on-chain data suggests a group of investors are leaving the market en masse.
More short-term holders are giving up their holdings
In an Oct. 18 post on the X platform, on-chain analyst Darkfost said revealed that a significant number of short-term Bitcoin investors have started closing their positions and realizing their losses.
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Darkfost’s analysis was based on the Net Realized Profit/Loss metric, which tracks the net amount (in USD) of profit or loss realized along the chain. This metric measures net profit or loss on a daily basis, in this case averaged over seven days. It provides insight into whether more investors are selling at a loss or with their heads above water.
According to the crypto expert, BTC investors’ realized losses have risen to a level of around $750 million per day, one of the highest levels this current cycle has ever seen. Interestingly, Darkfost explained that the magnitude of these capitulation events is easily comparable to that of the 2024 summer correction.
What is worth noting about this capitulation phase is what is likely to follow. According to the analyst, these types of events usually precede local bottoms. What this means is that after short-term holders (known as the ‘weak hands’) transfer their holdings to the more confident long-term holders (the ‘diamond hands’), the cryptocurrency has a chance of a price rebound – an expectation that is consistent with historical trends.
On the more cautious side, however, Darkfost issued a subtle warning that the gloomy opposite could also be the case in a situation where the market is in an early bearish phase.
Bitcoin whales may be gathering again
In support of the positive redistribution theory, a Quicktake post on Abramchart’s CryptoQuant platform offers a glimmer of hope for Bitcoin market participants. Referring to the inflows to accumulation addresses (dynamic cohort), the analyst highlighted a significant inflow of over 26,500 BTC into whale accumulation portfolios.
When large amounts of Bitcoin – such as this size – are moved, it usually indicates an underlying institutional or whale accumulation, as coins are typically transferred from exchanges to these wallets for long-term safekeeping.
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According to historical patterns, it is highly likely that this accumulation event precedes a continued bullish expansion of the flagship cryptocurrency. As Abramchart explained, this trend all serves as an indication that smart money is “quietly buying the dip.”
At the time of writing, Bitcoin has a valuation of around $106,870, with no significant movement seen in the last 24 hours.
Featured image from iStock, chart from TradingView