Bitcoin has dropped $20,000 from the all-time high it hit back in November, but that hasn’t swayed long-term holders from selling off dramatically.
The leading cryptocurrency lost about 6% on Tuesday, falling to below $50,000 again after climbing back past that price level heading into the Christmas holiday.
Data from analytics firm Glassnode indicates that while bitcoin prices have faltered within the past month, buyers are picking up where sellers left off. This is translating to stability in terms of bitcoin supply circulation.
“Bitcoin prices have fallen almost $20,000 since November 2021′s highs of over $69,000,” a CoinDesk article says. “However, analytics show the supply held by investors has only dropped to 13.3 million BTC from 13.4 million BTC – a marginal change considering the massive price drop.”
In essence, long-term holders are buying the dip, fully diving into the dollar cost averaging methodology. It’s something that Glassnode notes is par for the course in terms of bear markets with respect to bitcoin.
“Such on-chain behavior is more typically observed during bitcoin bear markets, which in hindsight are effectively lengthy periods of coin redistribution from weaker hands, to those with stronger, and longer-term conviction,” explains Glassnode in a Monday newsletter.
Crypto Regulations Spooking Investors?
The implementation of cryptocurrency regulations by governments worldwide could be spooking investors into sell-offs. In most recent news, Iran may be cracking down on crypto activity.
“For legalizing the activity of cryptocurrencies and protecting people’s capital in this area, we must think of a solution as soon as possible and lay down and communicate the necessary laws and instructions,” said Iranian President Hassan Rouhani, noting that “unprofessional entry in this field should be avoided.”
China has already been cracking down on crypto mining activity, but it is also exploring the use of a digital version of the yuan. Meanwhile, El Salvador is fully leveraging the use of bitcoin, making it legal tender for use in the country and also planning a bitcoin-funded city.
That said, Iran itself is not opposed to cryptocurrencies. Like China, it could be using the underlying technology to its advantage, but at the same time, it wants to exercise a level of regulation.
“Iran is not hostile to crypto – the authorities have explored using it to skirt international sanctions on the country,” CoinDesk notes. “However, the government apparently wants greater control: In April, the central bank said banks and licensed moneychangers can use cryptocurrency mined by authorized Iranian miners to pay for imported goods, at the same time banning the trading of crypto coming from abroad.”
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