Key Points
- The sharp drop in inflows to Blackrock’s IBIT spot ETF could lead to long-term Bitcoin holders increasing their deposits to exchanges.
- Despite recent losses, long-term Bitcoin holders would still profit if they sold their coins at the current price.
The topic of long-term holders of Bitcoin (BTC), defined as those who have held the asset for at least six months, often comes up during a bull market. This is due to these holders taking advantage of this phase to make a profit, after quietly accumulating during the bear market.
Speculation and Anxiety
An on-chain analyst and author at CryptoQuant has drawn attention to the possibility of these long-term holders increasing their deposits to exchanges in the near future. This speculation has led to some anxiety in the market.
This forecast is tied to the significant drop in inflows to Blackrock’s IBIT spot ETF. This ETF is the second-largest in terms of overall holdings and has led the wave of inflows over the past two months.
The daily inflows into the $15 billion-strong Bitcoin investment fund have been declining after reaching a peak earlier in the month. On March 22, only about $18.89 million in Bitcoins was purchased, compared to nearly $45 million on March 12.
OTC Transactions and Decreasing Inflows
The researcher explained that most transactions between the long-term holders and BlackRock have happened over-the-counter (OTC) in the last two months. This means that despite a sharp drop in their holdings, long-term holders did not have to deposit their coins to exchanges, unlike in previous bull cycles.
However, the decreasing inflows to BlackRock suggest that demand is weakening. The researcher noted that if this trend continues, long-term holders may start depositing Bitcoin into exchanges as they did in the past. If that happens, the likelihood of the price dropping increases.
Bitcoin’s sharp drop from the $73k peak earlier in the month has affected the network’s overall profitability. At the time of writing, Bitcoin investors are realizing losses on average. However, long-term holders would still make a profit if they decided to sell their coins at the current price, as indicated by the MVRV Long/Short Difference indicator.
