October 3, 2023

Bitcoin has fallen below the $27,000 mark in the past one day. Here are the market segments that are likely participating in this selloff.

These Bitcoin Investors Have Been Spending Their Coins Lately

In a new tweet, on-chain analytics firm glassnode has broken down the prices at which the average coins sold today were purchased. Generally, the BTC market is divided into two main segments: long term holders (LTH) and short term holders (STH).

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STH comprises a set of all investors who acquired their bitcoins within the last 155 days. On the other hand, LTH are those investors who hold more than this limit.

In the context of the current discussion, the relevant indicator is the “inactivity average spending threshold”, which captures the period in which the average coins spent/transferred by these two groups were previously received.

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For example, if the metric shows the 7-day spending range for LTH as $20,000 to $30,000, it means that coins sold by these investors last week were initially purchased at prices in this range.

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Here is a chart showing the data for STH and LTH as well as the current 7-day inactivity average spend range for the combined market.

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The different average spending ranges of the main segments of the sector | Source: Glassnode on Twitter

The graph shows that the 7-day moving average range for STH is very close to current prices of $30,400 to $27,300. Some of these sellers bought at higher prices than last week, so they may be selling at losses (though not particularly deep).

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The indicator places an buying range for LTH at $67,600 to $35,000. As highlighted in the chart, the time frame of these buys includes the lead-up to the November 2021 all-time high, the top itself and the period when the decline towards the bear market first began.

It appears that these holders who bought in at higher bull market prices as the cryptocurrency has been under pressure lately have finally decided to take their losses and move on.

Generally, the longer an investor holds their coins, the less likely they are to sell them at any time. This would perhaps explain why the acquisition time frame of the current STH is so recent; Fickle are those who have stayed for a short time.

For BTC LTH, however, the likely reason that the average seller’s acquisition period from this group is so far behind, rather than close to, the 155 days ago (the cutoff for youngest LTHs), is that many of the younger LTHs currently Will be in profit as he bought during lower market prices.

Related Reading: Is the Falling Bitcoin Price a Sign of the Start of Another Bear Market?

Thus, bitcoin investors more likely to waver in their conviction are the top buyers of the 2021 bull run, taking the most severe losses right now.

The chart also includes the 7-day average spending range for the combined BTC area, and as one might expect, the range is in the middle of the two groups ($15,800 to $28,500), but the time frame is closer to STH, with a As many sellers are bound to be recent buyers.

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btc price

At the time of writing, bitcoin is trading around $26,300, down 10% over the past week.

bitcoin price chart

Looks like BTC has taken a plunge during the past day | Source: BTCUSD on TradingView

Featured Image from Kanchanara on Unsplash.com, Chart from TradingView.com, Glassnode.com