The world of Bitcoin experienced significant turbulence recently, with the cryptocurrency witnessing its largest single-day drop of 2023. This decline, which saw an 8.1% dip at one point, triggered a wave of panic selling among short-term holders (STHs), according to data from Glassnode, an on-chain analytics firm.
The data reveals that on December 12, speculators hastily sold off more than $2 billion in Bitcoin as the price corrected toward the $40,000 mark. This mass sell-off is indicative of the speculative nature of a subsection of Bitcoin investors who appeared to lose confidence in the market's future trajectory.
Short-Term Holders' Selling Spree and Market Analysis
Glassnode's findings show that entities holding Bitcoin for 155 days or less, categorized as STHs, transferred a substantial amount of Bitcoin to exchanges - $1.93 billion on December 11 and an additional $2.08 billion the following day.
These figures represent long-term highs in terms of STH selling pressure, encompassing entities both in profit and at a loss. This behavior mirrors a similar scenario from June 2022, when the market reacted to the impending collapse of the blockchain firm Celsius, marking the last instance of single-day selling surpassing the $2 billion threshold.
James Van Straten, a research and data analyst at CryptoSlate, commented on the significance of these movements on X (formerly Twitter). He noted that the sell-off included $1.1 billion at a loss, likely attributable to retail investors who bought Bitcoin between December 6 and 13, encouraged by its year-to-date rise.
Despite the high dollar value of the sell-off, the actual volume of Bitcoin sold was less significant, with the December 12 tally marking the largest since early July.
There we have it!
The biggest short-term holder sell-off in #Bitcoin yesterday since Luna and eclipsed last week's sell-off.
$2B in total, with $1.1B in loss.
That is for anyone who bought between Dec. 6 and Dec. 13, most likely retail, after seeing Bitcoin up 150% YTD.
At that time, the BTC/USD value had just rebounded above $30,000 after a dip to $25,000. Researchers analyzing the market trends noted that profit-taking around this month’s 19-month highs near $45,000 was meaningful.
They suggested that a saturation of demand might be at play, potentially indicating market exhaustion. The Mayer Multiple, an indicator of the relationship between Bitcoin's current spot price and its 200-week moving average, is nearing 1.5.
This level historically acts as bull market resistance. As of now, the Mayer Multiple stands at 1.47, close to the resistance level seen in previous cycles, including the November 2021 all-time high.