Bitcoin Primed for Wild Swings as Dormant Supply Awakens

Dormant Bitcoin (BTC) supply has seen a significant increase in movement, reaching its highest level in over two years. This surge in activity suggests that long-term holders are beginning to sell their holdings, potentially signaling increased volatility and price surges in the near future. Whales, on the other hand, have been actively accumulating BTC, indicating their belief in its long-term price appreciation.

Is Bitcoin Poised for a Volatile Ride?

Bitcoin (BTC) has been trading sideways between $64k and $67k this week, but could we be in for some fireworks ahead?

Dormant Supply on the Move

Santiment's data shows a surge in dormant BTC supply moving between addresses on March 23rd, the largest spike in over two years. This typically signals a shift from HODLing to active trading, often preceding volatility and price increases.

Long-Term Holders Cashing In

As Bitcoin's price hit new highs in 2024, long-term holders have started to take profits, freeing up more BTC for trading. This fall in dormant supply further supports the likelihood of increased volatility.

Market Structure Favors Price Rise

Glassnode's Net Unrealized Profit/Loss metric indicates that most long-term holders are currently in profit. This market phase, known as "belief," has historically led to further price increases. The market top, typically associated with euphoria and greed, is still a ways off.

Whales Accumulating

Whales are seizing the opportunity to add to their Bitcoin exposure, with the number of entities holding at least 1k BTC hitting its highest level since February 2021. Even after Bitcoin's recent correction, accumulation has continued, suggesting a strong belief in its long-term value.

Whales Bullish in Derivatives Markets

Whales are also showing their optimism in the derivatives markets, with nearly 58% of all whale positions on Binance being long on Bitcoin, according to Hyblock Capital. This suggests that whales are betting on a further rise in Bitcoin's price.

Conclusion

The surge in dormant supply movement, coupled with the positive market structure and continued whale accumulation, paints a picture of a Bitcoin market poised for potential volatility and price increases. However, it's important to remember that cryptocurrency markets are inherently unpredictable, and caution should always be exercised when investing.