Presumed profit taking results in low numbers of dormant Bitcoin.
The level of dormant Bitcoin in digital wallets remains low despite the enthusiasm in the market. This is seen as a potential warning sign for the cryptocurrency, as spikes in dormant Bitcoin have historically preceded rallies. When Bitcoin remains dormant, it means that it is not being sold, leading to a decrease in the circulating supply. This trend suggests that long-term investors are taking profit in the current market climate.
According to data from blockchain analytics firm Glassnode, only 1,832 BTC have remained untouched for the past two years. This is a significant decrease from the over 30,000 BTC that were dormant in late December. Such low levels of dormancy for Bitcoin often precede major price swings.
High levels of dormancy indicate that Bitcoin holders believe it is better to not do anything with their holdings. On the other hand, low levels of dormancy suggest that more holders are actively moving their Bitcoin, possibly to sell or trade it. The number of Bitcoins that have remained untouched for five years has also decreased from almost 16,400 in December to around 300.
Bitcoin is currently a trending topic on social media, with Santiment reporting that it has topped its social dominance chart, accounting for 3.5% of all crypto-related social media posts. This trend is primarily driven by anticipation of the approval of a spot Bitcoin exchange-traded fund by the United States Securities and Exchange Commission (SEC). Many long-term holders see this as an opportunity to sell at a high price.
In summary, the low levels of dormant Bitcoin in digital wallets indicate a potential warning sign for the cryptocurrency. Long-term investors are taking profit, and more holders are actively moving their Bitcoin, possibly in anticipation of a spot Bitcoin exchange-traded fund approval.
