Bitcoin Price Gains Amidst Weak Conviction as Whales Trim Positions and Long-Term Sentiment Remains Muted

Bitcoin displays notable price strength while investor confidence remains tenuous, signaling potential market caution.

• Long-Term Holder NUPL has remained static at 0.69, despite Bitcoin’s climb from $85K to over $103K, highlighting persistent skepticism among investors.

• The Stock-to-Flow Ratio has surged 116.67% post-halving, now standing at 43.5K, emphasizing Bitcoin’s narrative of increasing scarcity.

Bitcoin’s [BTC] long-term holder NUPL has plateaued at 0.69, a level unchanged since April 1, even with a price increase from $85K to $102K. This stagnation illustrates that while prices rise, long-term sentiment among investors remains largely unchanged. The maturation of December 2024 buyers into long-term holders dilutes unrealized profit shares, reflecting a cautious stance even amidst positive price movements. Currently, BTC is trading at $103,842, a 1.74% increase over the last 24 hours.

Despite the seemingly bullish trend, the subdued sentiment among long-term holders indicates a growing disconnect between price action and investor confidence that has developed over the past few weeks.

Are whales unloading too soon?

In a significant move, whales have liquidated over 30,000 BTC within the last 72 hours, indicating a strategic trimming of their positions.

Notably, Large Holders Netflow has plummeted, with a decrease of 176.22% over seven days and 71.25% over thirty days, according to IntoTheBlock data.

This pattern signifies a trend of distribution rather than accumulation, suggesting that large holders are expressing diminishing confidence in short-term price increases.

As these significant holders exit, caution appears to be permeating the market.

Source: IntoTheBlock

Should large holders continue to decrease their exposure, the potential for short-term momentum to weaken looms large, regardless of Bitcoin’s rising valuation.

Interestingly, over 94.88% of Bitcoin addresses are currently operating in profit, with only 0.88% standing outside their cost basis. This statistic may reflect robust profitability but also introduces the risk of distribution.

Historically, extreme profitability levels often precede corrective phases; thus, the potential for increase in market supply looms if holders opt to realize their gains.

Is rising derivatives activity masking weak conviction?

While activity in Bitcoin’s derivatives market has increased, the underlying conviction appears weak. Futures volume has surged by 36%, accompanied by a 45% increase in options volume. However, looking deeper reveals a more complex picture.

Futures open interest has only risen by 1.5%, while options open interest has actually declined by 5%. This discrepancy suggests that while speculative trading is on the rise, it lacks solid long-term positioning, indicating that traders remain wary.

Current momentum lacks the robust leverage commitment seen in prior significant rallies. Nevertheless, an influx of stablecoin buying power is evident.

The Exchange Stablecoin Ratio has increased by 4.49% to 0.00005, indicating heightened reserves of stablecoins. This suggests that there is capital ready, poised for market entry at a more opportune moment.

However, until this capital is deployed, demand remains dormant. A price dip could potentially trigger an influx of stablecoin buying, providing necessary support for Bitcoin prices, yet, without such a trigger, this demand remains inactive.

Source: CryptoQuant

Is BTC’s long-term scarcity narrative growing stronger?

Examining the broader picture, Bitcoin’s Stock-to-Flow Ratio has notably increased by 116.67%, reaching 43.5K. This surge highlights the ongoing impact of the recent halving-induced supply shock.

If demand resurfaces strongly, this diminished supply could lead to rapid price enhancements. Still, the absence of new investment inflows means this optimistic structure remains only partially utilized.

Monitoring this Stock-to-Flow Ratio is crucial, as it serves as an indicator of Bitcoin’s intrinsic long-term worth.

Source: CryptoQuant

In summary, Bitcoin demonstrates commendable price resilience but reveals a lack of conviction among investors. While long-term holders remain subdued, whales are offloading their assets, and derivatives metrics indicate uncertainty. Although stablecoins imply a readiness to engage, they have yet to take action. Ultimately, sustained rallying hinges on renewed demand to absorb selling pressure and validate existing price points.

Conclusion

As market dynamics evolve, investors should remain vigilant and responsive to shifts in both macroeconomic indicators and retail sentiment, enhancing their strategies in this complex landscape.