On Chain Analytics Suggest Bitcoin Crash Driven by Newcomers, While Long Term Holders Aren’t Selling

Read our Advertiser Disclosure.
Contributor, Benzinga
June 30, 2021
verified by Ryan McNamara

Bitcoin began 2021 in excellent form rising 117% from January 1st to April 13th. Then, due to an uncountable number of factors including overleveraged traders, Elon Musk FUD and the Chinese Government, it all came crashing down. 

From April to now, bitcoin has come down about 45%. The million dollar questions left to be answered: is this the beginning of a multi-year bear market, or is this simply a mid-bull run re-accumulation phase? 

According to Glassnode’s research, the majority of recent bitcoin sellers were short term holders who bought Bitcoin within the past 5 months. The overwhelming majority of these investors sold their Bitcoin at a loss.

Last week marked the largest net realized loss in crypto history, of around $3.4 billion.

SOPR is the ratio of price purchased to price sold. A SOPR below 1 indicates a loss, while a SOPR over 1 indicates a net gain. As the data below shows, the short term holders (less than 5 months) have been locking in losses since the end of May.

Note: All Bitcoin sold at a loss was bought this year. Any Bitcoin holder who bought in 2020 or earlier is still in profit.

On the other hand, long term bitcoin holders (Bitcoin holders who’ve owned Bitcoin longer than 5 months) have been consistently locking in profits all year. Note that the long term holders SOPR remains well above 1, suggesting that the long term holders remain convicted and refuse to close positions that are deep in the black.

The data suggests that newer crypto players are more apt to sell their cryptocurrency than long term hodlers who are more accustomed to this type of mid-cycle volatility. I also believe the market is currently experiencing a reaccumulation phase as opposed to a multiyear bear market, and long term bitcoin holders appear to agree.  

See also: How to Buy Bitcoin

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts
The Crypto Rocketship: Weekly Newsletter
  • Exclusive Crypto Airdrops
  • Altcoin of the Week
  • Insider Interviews
  • News & Show Highlights
  • Completely FREE