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Elon Musk's Mood Swings Split Bitcoin Market Into Paper Hands And Diamond Hands, Shows On-Chain Data

May 17, 2021 11:41 pm
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Elon Musk's Mood Swings Split Bitcoin Market Into Paper Hands And Diamond Hands, Shows On-Chain Data

Bitcoin (BTC) has fallen nearly 20% in a seven-day period leading up to press time after Tesla Inc (NASDAQ:TSLA) CEO Elon Musk’s barrage of tweets related to the apex cryptocurrency. The dip in the market, the deepest in the current rally, has unnerved new entrants while seasoned hands seem unaffected by the upheaval, according to a Glassnode note. 

What Happened: The blockchain data and intelligence provider said that Musk’s tweets have led to “widespread confusion” in the markets.

Glassnode said they have observed a “bifurcation of reactions” on-chain. Newbies are panic selling and reaping losses while long-term investors — known as “Hodlers” in cryptocurrency parlance — remain unfazed. 

BTC traded 1.1% higher at $44,969.85 at press time on a 24-hour trailing basis. The apex cryptocurrency by market capitalization has fallen 30.62% since its Apr. 14 all-time high of $64,863.10.

Why It Matters: Spent Output Profit Ratio or SOPR — a metric which gauges whether wallets are selling at profit or loss while considering the entire market but filtering out coins with a lifespan less than one hour — and Short-Term Spent Output Profit Ratio or STH-SOPR, which filters out coins younger than 155 days were cited by Glassnode.

Data Indicates Short-Term Holders Got Burned. Courtesy, Glassnode

Both metrics have declined below 1.0, which, according to Glassnode shows that aggregate losses have been realized on-chain.

Another evidence that points to panic selling is the 1.1 million addresses that have spent all coins held during the correction.

However, the on-chain intelligence firm pointed out that at the current peak, short-term holder-owned coins are lower than what was observed during the 2017 rally in both coin volume and as a percentage of the circulating supply.

See also: How to Buy Bitcoin (BTC)

New holder coins made up 28% of the circulating supply, which is 9% less than what was seen during the 2017 peak.

Total Supply Held By Short-Term Sellers, As Per Glassnode

Holders are buying the dip, as per the note. Glassnode pointed to accumulation addresses, which are those that have at least two incoming transactions but have never spent any holdings.

As per Glassnode, the current long-term holder supply is over 2.4 million BTC, which is 8% of the circulating supply. This number is greater than the 2017 peak, an indicator that a large number of coins have moved to illiquid cold storage and that trend is firmly set.

Total Supply Held By Long-Term Holders

“There are strong signals that short term holders are leading with panic selling, however long term holders are stepping in to buy the dip and their confidence is largely unshaken,” concluded the note.

Read Next: Bitcoin Still Has Upper Hand Over Tesla Shares, Says Analyst Who Predicted Rise To $50K

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