Thanks to long-term holders, Bitcoin is successfully going through bearish phase of market
On his personal Twitter account, on-chain analyst and economist Willy Woo Explained Possible reasons behind bitcoin’s resilience against massive deleveraging. The group of traders behind the provision of prime liquidity and leverage are long-term holders who are “not giving up their BTC.”
According to Woo, long-term Bitcoin holders are acting as sponges that absorb the existing selling pressure and allow the market to move with relative ease. Long-term holders’ conviction to hold and buy more Bitcoin could be the main determinant that keeps Bitcoin from crashing to critical levels.
Traditionally, a larger percentage of long-term holders on a chain makes a network healthier than assets that have mostly mid- and short-term holders, who tend to sell off their holdings with almost any volatility spike, create unnecessary risk and move the property. Price generally down.
According to Woo, the aforementioned group of traders is increasing its portfolios mostly on the spot market, which explains the lack of open interest in Bitcoin-based derivatives like futures or options.
Traditionally, the asset’s general divergence leads to a disastrous price performance that causes an asset to crash in the spot market as trading platforms sell off their actual BTC holdings after the “paper bitcoin” is no longer useful.
Despite Bitcoin’s tumbling on the market through all of 2022, the deleveraging is still present in the industry and the main reason for it is the global derisking trend among institutional and large retail investors.
Thanks to the above group of traders, bitcoin successfully went through that market phase and even managed to gain some value. According to technical analysis, over the past 14 days, bitcoin has increased its value by more than 9%, and the rally is yet to reach its limit.
