Despite fresh waves of regulatory litigation and muted market dynamics, on-chain data suggest larger crypto investors are clinging on throughout a period of uncertainty. On Tuesday, the number of unique addresses holding at least one Bitcoin breached new highs, above one million, as the market continues to digest Blackrock’s spot ETF filing late last week. Addresses cradling a larger share — above 10 BTC — have also breached heights not seen since September 2019.
This week, Bitcoin’s dormant supply hit a new all-time high of 15.2 million BTC, while exchange balances plunged to their lowest since January 2018. Bitcoin held in wallets that have little to no transaction history suggests more holders are opting to guard their coins rather than spend them in anticipation of future price rises. Roughly 146,000 BTC per month is making its way into illiquid wallets away from centralized exchanges, which may be offering up a narrative for a “gradual and steady” accumulation phase for specific cohorts over the next six months.
However, this could also lead to a period of boredom over the next eight to 18 months, pointing to previous cycles throughout Bitcoin’s 14-year history. Blackrock’s decision to push through its iShares Bitcoin Trust with the SEC comes at a time of doubt among sophisticated entities seeking to turn a profit, including market makers, as noted by Auros co-founder Ben Roth.
“Markets have become noticeably quieter in recent months with volumes dropping to three-year lows and volatility at levels not seen since 2019,” Roth told Blockworks. This can be partly attributed to an extended downtrend in the market, where crypto “tourists” eventually concede defeat and cash out, and a consequence of regulatory scrutiny across several jurisdictions, including in the US, which has led to large trading firms withdrawing from select market segments.
Although this inherent risk could widen spreads further and diminish overall liquidity, current on-chain data seem to support the notion of strong-handed holders amidst market uncertainty. The decision by investors to hold onto their cryptocurrencies could indeed paint a picture of a more optimistic future ahead, once the market regains its footing.
As the market continues to evolve, investors should remain aware of the potential risks and rewards in the ever-changing world of cryptocurrency. While it is essential to understand the pros and cons of each decision, ultimately only time will tell how these current market trends will play out in the long run.
Source: Blockworks
