This week, we look at a perplexing question that the bitcoin market has brought up recently.
Data shows that the number of active bitcoin addresses has been on the lower side, and a lack of on-chain activity is often a key indicator of a bearish Bitcoin market. Some speculate that tense standoffs in global geo-politcs is a reason why, not just crypto, but the market at large is going through strong price corrections.
Bitcoin was in the $34,000 range for most of last week with a 21.4% drop in price in the past seven days. Other major global financial indexes such as the S&P 500 and the Dow Jones Industrial Average are down nearly 2%.
This time around, crypto supporters recommend people to “buy the dip,” an investment principle of buying low during a sharp decline in crypto prices, with a strong indication that they’ll rise again.
But here’s why people are not ‘buying the dip’
On the contrary, this optimism is pretty much shallow at the moment as search volumes for the use of this term have waned since the start of the year. But this isn’t a sign that investors are losing interest, it could also mean that people do not consider the $30K range to be the bottom yet.
A quick look on HODler activity proves that despite the recent price drops, a bitcoin HODlers prefer to hold and accumulate additional coins.
According to IntoTheBlock, the majority of bitcoin holders are long-term investors, with 57% holding for more than a year.
Is the Bitcoin market maturing?
Short-term traders are the main drivers of BTC volatility and this shift in HODler activity could mean people are looking for new ways to ride volatile waves. And, there’s no denying that crypto is increasingly attracting institutions who invest large amounts, rather than short-term investors who are more likely to spend bitcoin.
What’s Next for Bitcoin?
In the week ahead, the conflict between Russia and Ukraine will likely make unpredictable headlines and, additionally, Federal speeches on the U.S. real estate market and inflation will also affect market activity. Watch this space as we continue to keep you up-to-date through the BitOasis Weekly Wrap.
