Bitrabo Editorial
Despite the increased purchasing of spot exchange-traded funds (ETFs), Bitcoin has encountered challenges. An analyst explains the reasons behind this trend.
The Impact of “Paper BTC” on Bitcoin’s Performance
In a recent analysis on X, Willy Woo discusses the bearish momentum of BTC amidst buying pressure from spot ETFs and institutional entities.
One significant source of selling pressure comes from long-term holders (LTHs), referring to market HODLers who hold onto their coins for extended periods. These investors seldom sell, and their selling patterns seem to follow a historical trend. The Coin Days Destroyed (CDD) metric tracks the movement of coins on the blockchain daily relative to their age, revealing a spike in dormant coins being sold during price rallies.
Notably, the recent surge in Bitcoin CDD coincided with a new all-time high in prices, indicating potential selling pressure from LTHs. Similar spikes in the CDD have been observed during previous bull runs, aligning with historical patterns.
Another factor contributing to the slowdown in Bitcoin’s recent performance is the prevalence of “paper BTC,” which includes derivative products not backed by actual cryptocurrency tokens. Woo highlights the impact of paper BTC on market dynamics, noting its influence on price trends.
While spot BTC inventory on exchanges has remained relatively stagnant, the rise in paper BTC during the recent bull market has impacted the overall market sentiment. Increases in paper BTC inventory have corresponded with a deceleration in BTC’s rally, suggesting a correlation between paper BTC levels and market momentum.
Current BTC Price Movements
Bitcoin saw a recovery above $66,000 over the weekend but has dipped to $65,300 today, indicating ongoing price fluctuations in the market.