After Bitcoin broke through its historical high last month, it experienced a significant decline. EMC Labs, a cryptocurrency fund management company, released a new report stating that the main reason for the Bitcoin decline in March and April was related to the first wave of large-scale selling in the bull market. However, the first wave of large-scale selling is about to end and will lay the foundation for the next upward trend.
EMC Labs stated that in a bull market, with abundant funds, new participants enter the market with capital to buy chips, which leads to the phenomenon of existing holders selling. For long-term Bitcoin investors, the bull market is a time for strong selling.
EMC Labs stated that in this cycle, December 3, 2023, was the highest point of long-term holders in history, when they held a total of 14,916,832 BTC. Subsequently, with the gradual start of the bull market, long-term holders began their four-year periodic large-scale selling. As of March 31, a total of 897,543 BTC had been sold.
The report found that both long-term and short-term investors started large-scale selling on February 26. From February 26 to March 12, which was the first half of the selling period, Bitcoin was in a buying-dominated period, and the price rose from $51,730.96 to $71,475.93.
During the second half of the selling period from March 13 to March 31 (which has not yet ended), Bitcoin was in a selling-dominated period, and the price dropped from $73,709.99 to a low of $60,771.74. From February 26 to March 31, sellers locked in nearly $63.1 billion in profits.
EMC Labs stated that although the scale of selling has decreased significantly as of the end of March, it still exceeds $1 billion per day, which has caused the price rebound to fail and a downward trend in April.
However, EMC Labs believes that the selling pressure is declining significantly, and the first wave of large-scale selling in the bull market is approaching its end. This wave of large-scale selling before the halving in April has cleared a large number of profit chips, which will help raise the cost basis of BTC and contribute to the next stage of price increase.
EMC Labs explained that during the price increase period, whether the selling to lock in profits leads to a price decline depends on the balance of power between the long and short sides. In the early stage of selling, sellers only sell tentatively, and the price will continue to rise. As the scale of selling continues to increase, it eventually leads to the depletion of ammunition for the bulls, resulting in a price decline.
After the price decline, due to the price reasons, sellers begin to reduce the scale of selling, and the buying power continues to recover, thereby promoting the price to rise again. The two sides continue to compete in price fluctuations until the next selling range.
In the view of EMC Labs, selling is a normal phenomenon during the upward period of the market. Based on the inflow of funds through stablecoins and ETF channels and the adoption of application chains, the institution judges that there will still be fluctuations in the future. However, this round of the cryptocurrency bull market is unfolding in an orderly manner. For long-term investors, they should actively go long on the basis of caution.
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