As crypto winter deepens, bitcoin investors may hibernate

Only the most dedicated Bitcoin investors are still keeping their tokens, but they are not trading them on any exchanges as the crypto winter continues to worsen.

According to an analysis conducted by Glassnode, cryptocurrency investors are entering a state of hibernation as on-chain activity dropped by 13 percent in early July from November’s highs. These levels of on-chain activity were last seen during the bear phases of 2018 and 2019 when the value of Bitcoin was less than $10,000.

As investors pull their money out of cryptocurrency exchanges and store it offline in crypto wallets instead, the risk-off market mentality is beginning to permeate to these markets as well. According to Glassnode, the exchanges have seen a decline in their balances of more than 20 percent since their peak on January 20.

According to a newsletter published by Glassnode on July 4, “Bitcoin has seen a near full expulsion of market tourists, leaving the resolve of HODLers as the final line standing,” and this was said in the newsletter. The price of bitcoin dropped below $20,000 for the first time since the year 2020 last month.

There still seems to be a solid holder base, despite the fact that many activity levels, which are an indicative of demand, have been trending downward over the past few weeks, as prices continue to linger around $20,000. According to Glassnode, the fact that there has been relatively flat transaction activity implies persistent Bitcoin consolidation. HODLers, also known as steadfast investors who refuse to sell, are obvious.

According to Craig Johnson, the chief market technician at Piper Sandler Companies, the key levels to keep an eye on for Bitcoin are $18,910, a level that prices have gone below twice in the middle of June, and $21,557, which is around the time that it reached its highs in late June.

“Of course, there are no fundamentals when it comes to crypto. According to what Johnson said in an interview on Friday, “it’s simply purely price activity.” “You are just going to look at this and say that until you break out of that range — either up or down — you are not going to make any conclusions that there has been a trend change yet. In the perspective of a longer-term downward trend, all we are doing is consolidating for the short term.

Johnson believes that if the token is able to close above $26,000 or $28,000, it will finally be able to put an end to the downward trend that it has been on since April.

Coinbase Global Inc. has been impacted the worst by the recent decline in the price of Bitcoin. Over the past two years, the exchange has seen a decrease of 450,000 Bitcoin. According to Glassnode and TXMC, Binance has become the most popular Bitcoin exchange as a result of an increase of 300,000 Bitcoin in trading volume over the same time period. Binance has formed partnerships with Khaby Lame, the inventor of TikTok, and Cristiano Ronaldo, a great soccer player.

Investors have less faith in exchanges as a result of recent disruptions in operations, such as a halt in withdrawals at Coinflex and Vauld, as well as a cut in the maximum amount that can be withdrawn from CoinLoan. According to the data provided by Glassnode, the amount of illiquid supply climbed by 223,000 Bitcoin in the month of June as investors moved funds to wallets from exchanges. Large-scale cryptocurrency holders withdrew more than 140,000 tokens in June, accounting for a significant portion of the 223,000 total tokens that were removed from exchanges during that month. These whales are responsible for exchange outflows totaling almost 8.7 million, which is equivalent to more than 40 percent of the total supply of bitcoin.

It is the HODLers of last resort who are still standing while the Bitcoin bear is in full swing, according to Glassnode’s analysis.