Bitcoin Attempts to Steady Following Rout as Long-Term Bulls Maintain Bets

© Reuters

By Yasin Ebrahim – steadied Monday following a rout over the weekend as risk sentiment returned amid easing fears over the Omicron coronavirus variant and signs that long-term investors continued to stand firm.

was flat at $49,146.5 after plunging to a low of $45,032 on Saturday.

Investor appetite for risk assets improved with early signs the Omicron variant of Covid-19 may not be as deadly as feared.

As well as easing macroeconomic fears, sentiment on bitcoin was helped by data showing that long-term holders maintained their bullish bets during the most recent selloff.

“[O]nly 2.63% of older coin supply has been distributed [sold] into this group [bitcoin investors holding BTC for less than three-months] since October 27,” Glassnode said in its weekly report.

Over the weekend, the rout in bitcoin was driven by short-term traders, who were likely armed with leverage to fuel their bullish bets.

These cohort of investors likely bought the “their coins at the recent tops, and are already spending them [at a loss] to new hands,” according to the report.

Heading into the weekend, some had pointed to funding rates — or the cost of holding long positions in the futures listed on exchanges – nearing neutral levels, as a sign that a wild swing, or volatility event, in either direction was the horizon.

In the selloff that followed, investors rushed to close their leveraged positions, and the perpetual funding rate swung negative for the first time since in over two months to -0.035%.

Resets in the funding bias often represent a change in sentiment, and it can sometimes take weeks for a shift in bias.

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In the previous funding reset in July, it “wasn’t until early October when the trend began to reverse [which coincided with BTC’s record rally],” Glassnode said.

While the price action may continue to be volatile ahead, signs that the long-term holders aren’t losing conviction in their bullish bets may provide BTC bulls with some level of comfort.   

“[O]ver 97% of the supply older than 3 months has remained unspent since the recent all-time high and pullback. HODLers of older coins are not spending them, by and large,” Glassnode added.

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