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Bitcoin Slips as Traders Flee, but 'Hodlers' Continue Dip-Buying

CryptocurrencyMay 18, 2021 06:37
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By Yasin Ebrahim – Bitcoin slipped Monday, as newer entrants dashed for the exits amid fears Tesla (NASDAQ:TSLA) is preparing to offload BTC, but prices could steady as more experienced traders, or "hodlers" appear to be buying the dip.

BTC/USD fell 2.8% to $44,202, and is down about 20% in the past seven days. BTC’s market cap fell below $1 trillion to about $800 billion.

Total supply held by short-term holder of bitcoin, or STH SOPR, an on-chain metric by Glassnode, fell below 1.0, a sign newer traders – those holding BTC for less than 155 days - were desperately exiting their bullish BTC bets at losses.

Tesla CEO Elon Musk sparked fear, uncertainty and doubt, or FUD, over Tesla's stance on bitcoin following a recent move to suspend accepting BTC as a form payment.

Musk on Sunday, appeared to respond positively to a tweet from @cryptowhale that “bitcoiners” could be in for shock in the next quarter when they find out Tesla has sold off its remaining BTC holdings.

Following the selling frenzy that ensued, Musk clarified that Tesla hasn't sold any BTC. But the damage had already been done as many sense Musk, once a big fan of BTC, is preparing to pivot away from the popular crypto after criticizing the energy used to mine bitcoin.

The influence on the near-term price of bitcoin from rattled short-term holders is neither new nor unexpected. This cohort of investors tend to be momentum led, and often seek exposure to BTC close to current market prices, making them more responsive to near-term swings in either price direction than their long-term counterparts.

But long-term holders, or LTH, are taking advantage of the sale and are buying the dip as “supply held by long term holders (LTH) has returned to accumulation mode,” according to Glassnode, an on-chain analytics from the research and analysis firm.

The number of addresses that are in accumulation - BTC addresses with both at least two incoming transactions and no record of that any coins have been spent - have increased by 1.1% since the recent low, pointing to dip-buying by long-term holders, Glassnode added.

Others have also pointed to bullish signs that long-term holders are moving into to add to their long-term BTC positions.

Bitcoin Slips as Traders Flee, but 'Hodlers' Continue Dip-Buying

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