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New crypto investors who panicked sold their holdings might have led the recent market correction that saw Bitcoin (BTC) down by more than 35 percent from its all-time above $64,000 to below $43,000. Blockchain data also revealed that while newbies panicked, more seasoned long-term holders took the correction as an opportunity to buy in the dip.
“Newer market entrants have panic sold and realized significant loses on their coins…,” blockchain data analytics firm Glassnode wrote on Monday. “This is the second major dip below 1.0 for STH-SOPR during this correction, suggesting widespread panic selling by new holders.”
STH-SOPR stands for “short-term holder SOPR” or coins bought within less than 155 days, representing investors who bought Bitcoin during the current market rally. Meanwhile, values below 1.0 indicate that these coins were sold at a loss.
Glassnode also noted that the number of crypto wallets that contain non-zero BTC balances declined by 2.8 percent from 38.7 million to 36.7 million. “A total of 1.1M addresses have spent all coins they held during this correction, again providing evidence that panic selling is currently underway,” the firm wrote.
Contrary to the panic selling action of new investors, long-term holders are actually buying in the dip. The number of accumulation addresses rose by 1.1 percent from 530 thousand to 536 thousand.
“In almost perfect opposition to new entrants panic selling, long-term holders appear to be buying the dip and accumulating cheaper coins,” the company added. “Whilst the count of non-zero addresses has fallen during this correction, the number of addresses that are in accumulation have increased by 1.1% since the recent low. Accumulation addresses are defined as those which have at least two incoming transactions but have never spent any coins.”
“Overall, the Bitcoin market is in a historically significant correction,” Glassnode wrote in its summary. “There are strong signals that short-term holders are leading with panic selling, however, long-term holders are stepping in to buy the dip and their confidence is largely unshaken. The PoW energy consumption narrative is nuanced to say the least, and what follows will be a test for the whole Bitcoin market's conviction”
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