A recent report by VanEck, an asset management firm managing over a hundred billion USD, indicates that the current bitcoin (BTC) sell-off is primarily driven by mid-term investors. Over the past 30 days, selling pressure has been concentrated in wallets holding assets for under 5 years, while older wallets have largely maintained or increased their holdings.

Over the past six months, many tokens have shifted from investors holding for 3-5 years to those holding for 6 months to 2 years. This indicates a transition from mid-term holders to newer market participants.

Bitcoin logo. Photo: Reuters

Analytics firm Xwin Research reports that the short-term holder output profit ratio (STH-SOPR) for bitcoin has dropped to approximately 0,97 points and stayed below 1 point for several weeks. This indicates that investors who purchased BTC in recent months are now selling at a loss. The firm's data compilation reveals that over 65,000 BTC have been transferred to exchanges at a loss.

"Fear is evident in every actual sell order", Xwin Research stated.

The firm further reported that small bitcoin wallets "dumped" approximately 0,36% of their holdings within the last 5 days. Ether (ETH) and XRP experienced similar activity, reflecting broad market anxiety. The "fear and greed" index recently fell to a 9-month low, indicating significant market distress.

These reports coincided with BTC trading at its lowest point in over six months. This morning (Vietnam time), the world's largest cryptocurrency briefly dipped near 86,000 USD before recovering to almost 87,000 USD per unit. Its market value has fallen by over 6% in the last 24 hours and remains 31% below its all-time high of 126,080 USD recorded in early 10.

Online options platform Derive estimates a 50% probability of bitcoin ending the year below 90,000 USD. Conversely, the likelihood of the world's largest cryptocurrency closing the year above 100,000 USD has decreased to 30%.

Bitcoin has dropped below its 50-day and 200-day moving averages (MA). Sean Dawson, Derive's head of research, attributes the stalled upward momentum to the failure of previous bullish catalysts like declining interest rates. He estimates that cryptocurrency liquidations, spanning both long and short positions, reached 8,25 billion USD over the past 30 days.

A significant catalyst for bitcoin's downturn is the "less dovish" stance adopted by some Federal Reserve (Fed) officials. Many are advocating for delaying interest rate cuts, citing persistently high inflation. This has diminished expectations for a rate cut in 12, exerting pressure on cryptocurrencies and other risk assets such as stocks. The recently published US 9 employment report indicated an addition of 119,000 jobs, substantially surpassing forecasts.

The CME FedWatch Tool indicates that investors now anticipate only a 41% probability of an interest rate adjustment next month, a decrease from over 60% last week. Fed Vice Chair Philip Jefferson emphasized the necessity for "caution" with rate adjustments, warning that they could jeopardize efforts to curb inflation.

However, Sean Farrell, head of digital asset strategy at Fundstrat, suggests that short-term risks and opportunities are currently balanced. Oversold signals are appearing after BTC dipped below 90,000 USD, a level he identifies as a "potential price zone" capable of attracting buyers.

Tieu Gu (according to CoinDesk, Reuters)