Bitcoin continues to fall, who is selling? In addition to the overall supply and demand relationship, the emergence of “paper BTC” is also one of the key influencing factors. This article is from Willy Wo, compiled, translated, and written by Foresight News.
Bitcoin spot ETF inflows show that the market is constantly buying, institutions are also entering to buy, but the market trend seems to be going in the opposite direction, continuously falling, so who is selling?
Entering 2024, market participants are increasingly focusing on the inflow and outflow of Bitcoin spot ETFs, as if this data has become the key to understanding the true dynamics of the market.
It is important to consider the total demand and total supply. First, let me tell you who is selling. The OG is selling, they own more BTC than the sum of all ETFs combined by 10 times. They sell every bull market. This pattern has been around as long as the Bitcoin genesis block.
To better understand this phenomenon, we can refer to the chart: coin age x number of coins sold. This chart reveals the selling behavior of OG in the market and its impact on market trends.
The futures market is also a key factor affecting market trends. We are currently in the “modern era” of Bitcoin. Since 2017, “paper BTC” (referring to BTC that is not real) has begun to flood the market.
In the past, if you wanted to buy coins, you had to buy real BTC. In recent years, you can buy the so-called paper BTC. This means that those who do not have real coins can sell that piece of paper to you. You together create synthetic Bitcoins.
This potential demand for BTC has been transferred to paper BTC, fulfilled by traders who do not have BTC to sell, using only dollars as a bet.
In the past, the reason why the price of Bitcoin could grow exponentially was because the only sellers were a small amount sold by early holders and a small amount of newly mined coins sold by miners.
Now, you should pay more attention to the magic of “paper BTC.” The bear market in 2022 was caused by the proliferation of “paper BTC”, and in fact, real spot holders did not actually sell.
In the current bull market, I marked the periods when paper BTC increased, and during these periods, prices did not rise accordingly. We are currently in such a phase.
So simply focusing on ETF purchases is not enough to fully grasp the market trends, you also need to pay attention to on-chain data, derivative data, technical price trends, and other factors.
All these indicators increase the complexity of demand and supply. Analyzing them comprehensively is more like an art than a quantifiable science. In this market full of variables, everyone is just making logical guesses.