Here’s How the Current Bitcoin Capitulation Compares With Previous Crashes

On-chain data shows that bitcoin short-term holders are depositing 0.82% of its supply with exchanges. Here’s how these flows compare to previous crashes.

Bitcoin short-term holder inflow has increased recently

The BTC market can be divided into two broad investor groups, one of which is the “short term holder (STH) group”. STH are investors who have held onto their coins for less than 155 days.

Generally, bitcoin holders belonging to this group are the weakest hands in the market, as they can easily sell at the sight of any sharp volatility or uncertainty in the market.

The opposite cohort is called the “long-term holder (LTH) cohort,” and it naturally includes all participants who have been carrying their BTC in their wallets for more than 155 days.

These LTHs are usually in it big time, and they are diamond hands in this area that need a lot of pushing before they panic selling their coins.

Recently, the bitcoin market has seen the emergence of FUD in the market as a result of the US Securities and Exchange Commission (SEC) suing cryptocurrency exchanges Binance and Coinbase.

The market has acted volatile in both directions, but overall volatility has resulted in a fall in the asset’s price. Obviously, in such times, STH would be the first to break.

In a new tweet, on-chain analytics firm glassnode Have looked at STH’s exchange inflow data to see how they are handling the current situation.

The chart below shows the trend in bitcoin exchange flows for these investors over the past year:

Looks like the value of the metric has been a bit high in recent days | Source: Glassnode on Twitter

As you can see in the above graph, bitcoin exchange inflows for STH have been climbing recently and have now reached relatively high levels. “Exchange inflow” here refers to a metric that tracks the amount of assets that these investors are depositing into the wallets of centralized exchanges.

One of the main reasons investors transfer their coins to these platforms is for purposes related to sales, so exchange inflow data for these holders can provide us with clues about their current selling behavior.

In the context of the present discussion, a modified version of exchange inflow is being used; One that measures inflow in terms of a percentage of the total STH bitcoin supply.

STH exchange flows have recently reached a value of 0.82%, which means that these investors have been sending around 0.82% of their supply to these platforms recently.

This is certainly not a small value, but when compared to other panic selling events in the past year, namely the LUNA collapse, the FTX crash, and the March 2023 relief rally (all marked in red on the chart), the current flow Still very few.

This would mean that the latest uncertainty in the bitcoin market has not yet been enough to push STH into capitulating at levels similar to historical capitulation events.

btc price

At the time of writing, bitcoin is trading around $26,600, down 2% over the past week.

BTC has been consolidating in the last few days | Source: BTCUSD on TradingView

Featured Image by Maxim Hopman on Unsplash.com Charts from TradingView.com, Glassnode.com