Bitcoin Plunges Below $27,000, Which Holder Groups Are Selling?

Bitcoin has plunged below the $27,000 mark in the past 24 hours. Here are the market segments possibly participating in this sale.

These Bitcoin investors have been spending their coins recently

In a new tweet, the research firm writes on the chain Glass node has broken down the prices at which the average coins sold today were purchased. In general, the BTC market is divided into two main segments: the long-term holders (LTHs) and the short-term holders (STHs).

The STHs consist of a cohort that includes all investors who have purchased Bitcoin in the last 155 days. The LTHs, on the other hand, are investors who have held more than this threshold amount.

In the context of the current discussion, the relevant indicator is “dormant average consumption intervals”, which finds the periods when the average coins used/transferred by these two groups were first acquired.

For example, if the calculation shows the 7-day spending range for the LTHs as $20,000 to $30,000, it means that the coins these investors sold in the last week were originally bought at prices in this range.

Here’s a chart showing the data for the current 7-day average spending ranges for STHs and LTHs, as well as the combined market.

The different average spending ranges of the main segments of the sector | Source: Glassnode on Twitter

The graph shows that the 7-day average cost range for the STHs is quite close to the current prices of $30,400 to $27,300. Some of these sellers bought at higher prices than those observed in the last week, so they must have sold at a loss (but not particularly deep).

The indicator puts LTH’s acquisition range at $67,600 to $35,000. As highlighted in the chart, the time frame for these purchases included the lead-up to the November 2021 high, the peak itself, and the period when the bear market decline first began.

It seems that these holders who bought at the high market prices have been fed up with the pressure the cryptocurrency has been under lately and have finally decided to take their losses and move on.

Generally, the longer an investor holds onto their coins, the less likely they are to sell at any time. This would perhaps explain why the timeframe for acquiring the current STHs is so recent; the fickle are those who have only lasted a short time.

However, for the BTC LTHs, the likely reason that the acquisition period for the average seller from this group is so far back, rather than closer to 155 days ago (the cutoff of the youngest LTHs), is that many of the younger LTHs would be in profit at the moment as they bought below the lower, bear market prices.

As such, Bitcoin investors who are more likely to waver in their convictions right now will be the biggest losers, the top buyers in the 2021 bull run.

The chart also includes the 7-day average spending range for the combined BTC sector, and as you might expect, this range is in the middle of the two cohorts ($15,800 to $28,500), but the time frame is closer to the STHs, as a lot of the sellers are bound to be recent buyers.

BTC price

At the time of writing, Bitcoin is trading around $26,300, down 10% in the last week.

Looks like BTC has taken a plunge during the past day | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com