What causes Bitcoin’s selling pressure

Bitcoin ETFs and exchanges now have eight times more influence than miners, according to a new report.

According to a new analysis from Glassnode, selling pressure from miners decreases with each halving.

Meanwhile, centralized exchanges and ETF providers now have up to eight times more influence, a powerful example of how the market has changed.

Source: Instagram

This chart helps explain what has changed. The largest Bitcoin pool monitored by Glassnode is located on CEX.

This equates to three million BTC, equivalent to one-seventh of the total supply.

It is also interesting to see how the popularity of the 11 firms that have issued exchange-traded funds based on the spot price of Bitcoin has increased since January.

They currently hold a total of 887,000 BTC on behalf of investors, meaning they create much more selling pressure on days when there are significant outflows.

Excluding the large reserves held by Satoshi Nakamoto, miners currently hold approximately 705,000 BTC.

Glassnode says that this has been an extremely challenging period for the price of Bitcoin — the German government has sold off around 50,000 BTC in a matter of weeks. However, it noted:

“The majority was distributed in a very short window between July 7-10, with over 39.8k BTC flowing from tagged wallets. Interestingly, this sell-off occurred after the market bottomed around $54,000 — suggesting the market anticipated the news.”

Glassnode Source: Glassnode

Although they may worry everyday investors, government sales of cryptocurrencies are relatively rare.

While ETH ETFs are not expected to be in as much demand as their BTC counterparts, they could have a major impact on Wall Street’s performance.

And given that the supply is significantly reduced through staking, we could see the amount of ETH in circulation decrease rather quickly.

Glassnode noted that compared to Bitcoin, there appears to be “noticeably less interest” in Ether compared to the bull run in 2021, when daily ETH exchange flows were roughly on par with BTC.

“This suggests that the degree of speculative interest in 2024 is relatively weak, consistent with ETH’s generally weaker performance relative to BTC since the 2022 cycle lows.”

Glass knot

Returning to Bitcoin, it’s also interesting to see that the number of HODLers in profit has remained “solid” — even as the German government’s sell-off caused the world’s largest cryptocurrency to plummet to lows of $53,500. At that point, Glassnode’s estimates suggested that around 25% of coins were in unrealized losses, meaning they were now worth less than investors paid for them.

“This suggests that the degree of speculative interest in 2024 is relatively weak, consistent with ETH’s generally weaker performance relative to BTC since the 2022 cycle lows.”

Glass knot

The story gets even more interesting when you focus on the so-called “short-term holders,” as 66% of their BTC holdings went red during this period, one of the biggest declines on record.

“For the opposing group, i.e. long-term holders, there was negligible change in the proportion of their supply held as profit. This suggests that relatively few investors are still holding onto their coins from the 2021 bull peaks.”

Glass knot

After the German government launched Bitcoin, there was an impressive recovery in its price. BTC almost surpassed $68,500 immediately after Joe Biden withdrew from the presidential race.

Analysts described it as a “relief” that the worst of the selling pressure was over, but said the slowdown in trading volumes over the summer months could continue to pose a challenge.

Now all eyes are on whether Bitcoin can break the psychological barrier of $70,000, which has been out of reach since June.

Beyond that, breaking past the all-time high of $73,750 set on March 14, 2014 will be a bigger challenge.

Hitting a new record here would send Bitcoin back into an unprecedented era, and that momentum would undoubtedly lead to a renewed surge in ETF inflows.