Bitcoin's Drop on Thursday Spurred Panic Sales Among Short-Term Holders: Van Straten

Bitcoin's price drop on Thursday, March 1, sparked a wave of panic selling among short-term holders (STHs), according to James Van Straten, research and data analyst at crypto insights firm CryptoSlate. On that day alone, over $2 billion worth of BTC was withdrawn from exchanges, marking one of the largest single-day outflows in over five years.


This surge in selling activity mirrors the behavior seen during BTC's all-time highs in 2021, suggesting that STHs are locking in profits as the price approaches record levels. As BTC/USD nears its 2021 peak, STHs are taking advantage of the opportunity to realize gains, potentially setting the stage for further price appreciation once the selling pressure subsides.


However, it's essential to note that these withdrawals don't necessarily indicate panic selling. Instead, they could signify strategic moves by investors, such as transferring assets to private wallets or moving to other exchanges. Additionally, the influx of new entities and 'younger' coins, as shown by UTXO age bands, suggests that new investors are entering the market, which might be driving the increased activity.

The recent surge in selling activity by STHs could have significant implications for Bitcoin's price trajectory and market dynamics. STHs, who hold BTC for 155 days or less, have been actively realizing profits, with over $5 billion in transfers to exchanges in four days, mirroring activity seen during BTC's 2021 all-time highs. This increased selling pressure could lead to a temporary slowdown in BTC's price appreciation, as seen in previous bull markets. However, it's essential to note that STH profit-taking is a natural part of market cycles and does not necessarily indicate a long-term bearish trend.

As new investors enter the market, driving up demand, and the supply of newly-mined Bitcoin decreases due to the upcoming halving, the stage could be set for a supply squeeze like no other, potentially pushing BTC prices to new all-time highs.