More Gains Anticipated for Bitcoin as Long-term HODLERS Absorb Selling Pressure

New Delhi (CoinChapter.com) — Bitcoin experienced a cataclysmic market crash in May, losing almost half its market valuation within weeks. Since then, market sentiments about BTC have leaned towards bears.

It is because the plunge in bitcoin prices caused many traders to panic-sell their coins. However, long-term holders emerged as guardian-angels as they actively absorbed the selling pressure by buying bitcoins at their local dips. That ended up arresting any further damage that panic trading could cause — and the BTC/USD rate recovered.

HODLING is a strategy in which traders hold their assets regardless of short-term prices. Anthony “Pomp” Pompliano, a partner at Pomp Investments, believes that the long-term ‘HODLERS’ are the key to Bitcoin’s latest upside recovery. He highlighted the increasing number of long-term holders in his daily newsletter known as The Pomp Letter.

Bitcoin's recent price trends. Source: BTCUSD on Tradingview.com
Bitcoin’s recent price trends. Source: BTCUSD on Tradingview.com

What Anthony Pompliano Said

In the newsletter, Mr. Pompliano observed that bitcoin’s recovery speed might be slow, but there are positive signs.

The last week saw maximum selling occurring in addresses that held bitcoin for 1 day to 1 week. It usually happens when traders are not confident about price directions. Also, 1-3 months old bitcoins were second in the selling order. These young traders are wary of the BTC trends, as some analysts predict the prices to fall to the $20,000 mark before rising again.

Also Read: Bitcoin Could Crash Back to $20,000, Analyst Asserts

Nevertheless, long-term HODLERS have countered this selling trend.

As per the newsletter, ‘The chart below compares short-term holder supply to long-term holder supply. You can see short-term holders take up a larger portion of supply between November to mid-April.’ During this period, Bitcoin was riding a strong bullish rally and reached an ATH of $64,941 on April 14. Short-term holders rode this upward trend to gather profits.

The right half of the chart highlights the hodling tendency of Long-term investors. They used the latest dip to accumulate more Bitcoin, as they speculate the prices to go back up. At the same time, short-term traders continue to sell whenever the price rallies to cover their losses.

Mr. Pompliano observed that “long-term holders are adding to their positions, short-term holders are selling, some entities in the short-term cohort have now reached the 155-day threshold for this metric and are now in the long term cohort.

Bitcoin's total supply distribution. Source: The Pomp Letter
Bitcoin’s total supply distribution. Source: The Pomp Letter

There also exist traders who are trying to ride out the dip. These traders, who have held their coins for more than 155 days, can also be termed long-term hodlers.

Also Read: The 4th Largest Bitcoin Whale Buying More BTC Signals Additional Rebound to $42K

Another metric that supports this speculation is the Exchange Reserve. It measures the total amount of cryptocurrencies held in exchanges. An increase in exchange reserves forecasts a hodling sentiment, which strengthens BTC’s price recovery.

Bitcoin all exchange reserves. Source: BTC All Exchange Reserve on Cryptoquant.com
Bitcoin all exchange reserves. Source: BTC All Exchange Reserve on Cryptoquant.com

What This Means For Bitcoin

Bitcoin is not the apple of everyone’s eyes right now, but the forecast promises a brighter future. The Pomp Letter also mentions that the “Bitcoin market is no longer selling at a loss on aggregate.

As shown in the chart, BTC traders have started profiting again after the crash, a sign of recovery. Support from Bitcoin whales like Mark Cuban and adoption by firms like BNY Mellon, Mastercard, Morgan Creek, Goldman Sachs, among others, help fuel bullish predictions for the OG crypto.

BTC SOPR Chart. Source: Bitcoin Spent Output Profit Ratio on glassnode.com
BTC SOPR Chart. Source: Bitcoin Spent Output Profit Ratio on glassnode.com

Additionally, exchange flows for BTC are now bullish, stipulating a revival of BTC’s fortunes. It seems, for now, hodling is the way to go.

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