Now into the 15th week of sideways and downwards price action, Bitcoin is continuing to sell-off. How long is this going to go on for? Will Bitcoin eventually turn the corner and continue the bull market?
Long term holders take some chips off the table
It does appear that the $BTC selling is continuing unabated. Even $BTC long term holders are selling, and according to analyst Willy Woo, for these long term holders to be taking some profits at this point in the bull run is a normal thing to happen, and this also took place in the middle of the last two bull runs in 2017 and 2021. Woo said in an X post:
The OGs. They are selling
They have more BTC than all the ETFs put together... 10x more.
And they sell into every bull market.
This pattern is as old as the genesis block.
Bitcoin is near the level of the top of the 2021 bull market, so it does make complete sense for some of the long term holders to take some chips off the table.
Wall Street machinations
Then, according to Woo, there are the machinations of Wall Street. When the institutional money came flooding into the Spot Bitcoin ETFs, Bitcoin holders were deliriously happy. The price was forced up to such an extent that the 2021 $69,000 all-time high was reached, probably well ahead of time if previous bull markets are a guide.
However, with the entry of Wall Street came the big money games. Just as in the case with gold and silver, big money players were able to pile on the paper short bets. A huge short position of paper, leveraged up to the hilt, is enough to put the brakes on any market. Here is what Willy Woo had to say about it:
We are now in the modern age of BTC.
Paper BTC has flooded the market since 2017.
Futures markets.
If you want to buy BTC, it used to be you had to buy real BTC.
You can now buy paper BTC. Thus a no-coiner can sell you that paper.
Together you have made a synthetic BTC.
Bitcoin holders may be understandably nervous about the hedge funds arbitraging between shorting the futures and going long on spot Bitcoin. Nevertheless, according to financial analyst James Lavish, there are risks associated with this sort of behaviour. In his latest Informationist newsletter on Substack, he said that “it [the market] works both ways”, and if the market turns:
The price will just rip higher. And higher. And higher.
Until it rips your face clear off.
Therefore, the hedge funds that are shorting the price will need to be extremely careful. Should they get caught out, the ensuing short squeeze will force the price up even harder.
Miners’ profits fall considerably
Finally, the other major seller is likely to be the Bitcoin miners. Since the halving, the miners’ profits will have fallen considerably. Reserves of $BTC are likely to be sold so that the newest and most updated rigs can be purchased. Without these, miners are going to go out of business because they won’t be able to maintain profitability.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
