2021 is an “eventful autumn” for Bitcoin, breaking through a new high every few weeks. However, this does not mean that Bitcoin is not under a considerable amount of bearish pressure.
As of the writing of this report, the transaction price of Bitcoin is approximately $53,000. Bitcoin’s price shock is an essential part of it and a key part of the Bitcoin market cycle.
Taking into account the past quotations, the Bitcoin market clearly shows strong cyclicality in long and short trading. For example, after the Bitcoin bull market in 2017, there was obvious bearish sentiment and sideways movements.
However, this level of bearish sentiment has not been seen in the current bull market. Although sales pressures continue to accumulate, Bitcoin market participants believe that this is just what happened during the price discovery process of Bitcoin, making Bitcoin maintain Within the price range that hit the highest price in history.
Bitcoin’s market cycle deserves our attention. According to Glassode’s data, reserve risk indicators can provide some valuable information for the current market cycle.
This indicator tracks the perceptions of Bitcoin holders as they go through various phases of the cycle. A “wealth transfer” is taking place in the Bitcoin market, where long-term hoarders sell and allow new buyers to enter the market.
As the price rises and more holders sell Bitcoin, the reserve risk of Bitcoin will increase. During the 2017 bull market, the reserve risk of Bitcoin was the highest.
This indicator is rising, but it has not peaked yet, which means that the bull market may not be over. Although it has recently declined, a rebound is expected.
Glassode emphasized the three key phases of the Bitcoin cycle and assumed that in the first phase, long-term holders began to accumulate in the middle of the bear market and might lose money; in the second phase, long-term holders began to sell when the price rose; In the third stage, as the number of long-term holdings reached a peak, more long-term holders sold cryptocurrencies, and the market reached its peak.
“With the development of the bull market, higher prices have created greater temptation for holders to sell bitcoin. At a certain stage, we have reached the’holding peak’, which is a turning point. In this period of long-term holding Bitcoin owned by someone is still profitable.”
Interestingly, the data shows that after reaching the hypothetical peak of holders, long-term holders still hold a relatively large share of supply, even if 9% has been sold. In fact, this also shows that we are currently in the second half or late stage of the bull market.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.