Bitcoin has been struggling to keep up with the Nasdaq, as the cryptocurrency lost 6% in just one week while the Nasdaq reached an all-time high. This deviation from the usual positive correlation between Bitcoin and the Nasdaq Composite Index has been attributed to various factors specific to the crypto market.
One of the reasons behind Bitcoin’s recent slide could be profit-taking by long-term holders. As the price of Bitcoin neared its all-time high in November 2021, holders who have been inactive for years may have decided to sell their BTC, perceiving the prices to be overvalued. This was evidenced by a wallet that had been inactive since 2018 moving 8,000 BTC worth over $500 million to a crypto exchange, indicating a potential impending sale.
Additionally, data from analytics firm CryptoQuant shows that the number of BTC inactive for 1 and 2 years has declined, suggesting that long-term holders have been taking profits as the price remains near record highs. Furthermore, there are around 1.8 million BTC that have not moved for over a decade, including potentially the 1.1 million BTC mined by Satoshi Nakamoto.
Another factor contributing to Bitcoin’s price weakness could be increased selling by miners. Marathon Digital, a listed miner, sold 1,400 BTC worth $98 million in a single month, while miners collectively sold at least 1,200 BTC in a single day via over-the-counter desks. The decline in the hashrate, which measures the computing power dedicated to the Bitcoin blockchain, from 622 exahashes per second to 599 EH/s this month also indicates miner capitulation.
Looking ahead, the distribution of 142,000 BTC and 143,000 BCH by Mt. Gox to creditors by October/November 2024 could potentially create a significant overhang on digital asset prices. This distribution follows the exchange’s collapse in 2014 due to a hack and could lead to further selling pressure on Bitcoin.
In conclusion, while the popular narrative attributes Bitcoin’s recent slide to the Federal Reserve’s decision and other external factors, it is essential to consider the crypto-specific factors like profit-taking by holders, increased selling by miners, and the impending Mt. Gox distribution that may be influencing Bitcoin’s struggle to keep up with the Nasdaq.
