- The main catalyst for the retracement was higher-than-expected inflation rates.
- LTH supply fell to 6.5%, paving the way for distribution.
Bitcoins [BTC] The stay at $50,000 was short-lived as developments in the past 24 hours caused a slight price correction.
In fact, the king coin dropped to $48,472 around 5:15 PM UTC on February 13 before recovering to $49,500 at the time of writing, AMBCrypto found using CoinMarketCap facts.
Fears of a weak macroeconomic environment
The main catalyst of the retracement was higher-than-expected U.S. consumer price index (CPI) data, according to an on-chain analytics firm. Santiment.
Strong inflation ruled out options for interest rate cuts in the near future. This in turn has dragged down risky markets such as stocks and cryptos.
For the curious, the Federal Reserve uses the CPI to measure US inflation and calibrate monetary policy.
Long-term holders’ profits rise
However, due to the small correction, you should not ignore Bitcoin’s bullish wave lately. The world’s largest digital asset is up 127% in the past year, trading just 28% lower than its all-time high at the time of writing.
The result was that the majority of investors were enjoying gains on their investments at the time of writing.
Long-term holders (LTH), known for holding cryptos across multiple market cycles, saw a sharp drop in supply at a loss over the past three to four months, according to a report by blockchain research firm Glass junction.
As was clear, only about 6.5% of the LTH supply was lost. Interestingly, these levels were last observed during early bull market conditions in mid-2020.
Source: Glassnode
It is quite well known that LTHs accumulate during bear market conditions and losses. Then they go for distribution in the early stages of the bull market. And it turned out that they had already started unloading their suitcases.
There was a sharp decline in LTH supply from the peak in November 2023. However, more than 50% of the outflow could be attributed to Grayscale Bitcoin Trust (GBTC), which also falls under the label of long-term holders.
It would be interesting to monitor if the LTH sell-off gains momentum as Bitcoin gets closer to the ATH of $69,000.
Source: Glassnode
Read BTC price forecast for 2024-2025
In a statement shared with AMBCrypto, Shivam Thakral, CEO of Indian cryptocurrency exchange BuyUcoin, ruled out the likelihood of a continued rise in Bitcoin’s price in the short term.
“The coming days could see a decline in Bitcoin dominance and the start of a bullish trend for Ethereum and altcoins. “