- If Bitcoin continues to correlate with equities, then the price may plunge.
- HODLers have stuck to accumulating irrespective of the circumstances.
Bloomberg’s senior strategist Mike McGlone has explained that a price reversion for Bitcoin [BTC] could result in a great risk for the coin. Talking about the king coin on Twitter, McGlone compared the Bitcoin value at $26,000 to its correlation with stocks and equities.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
According to the analyst, Bitcoin’s correlation with traditional assets was 0.40— the highest level it had reached since the invention of the digital asset.
Furthermore, McGlone compared BTC’s performance to the season Amazon.com reached its peak, saying that a massive decrease in price could lead to another long period before BTC surpasses its ATH.
‘It Went Up, So Will Keep Going Up’ Risks in Bitcoin –
The lessons of high-performing, widely hyped assets show price reversion may be the greater risk once the masses jump on board. #Bitcoin at about $26,000 on Aug. 28 is slightly below the end of 2020, similar to… pic.twitter.com/3UdAbpLNLe— Mike McGlone (@mikemcglone11) August 28, 2023
One reason the analyst maintained the stance was the Bitcoin futures EFT approval. For McGlones, the ETF approval contributed to the drop in volatility. He also referred to 2021, saying that,
“The advent of futures-based Exchange Traded Funds in 2021 helped squash volatility and augmented cash-and-carry arbitrage.”
Recall that firms like BlackRock got the SEC’s nod for a Bitcoin ETF. However, the coin’s price action since then has been underwhelming at the expense of an impressive first quarter. Irrespective of the circumstance, many believe that a spot ETF approval would change the tides for the better for BTC.
However, the SEC has delayed in this aspect, pushing the applications of ARK Invest and 21Shares to undisclosed confirmation dates. But how has the affected BTC?
According to Glassnode, Bitcoin’s current condition has not deterred investors from holding onto the coin, as indicated by its liveliness. Bitcoin’s liveliness is defined as the ratio of the Coin Days Destroyed (CDD) to the Coin Days Created (CDC).
When the liveliness increases, it means that HODLers are letting go of their coins. However, a decrease in the metric, like it was at press time, suggests increased accumulation and a desire to continue holding.
Source: Glassnode
Furthermore, the Long-Term Holder (LTH) Supply had increased to 14.53 million. The LTH supply is the total amount of circulating supply held by long-term holders.
How much are 1,10,100 BTCs worth today?
The metric uses a logistic function centered at an age of 155 days and a transition width of 10 days with respect to the average purchasing data to weigh the sentiment around BTC.
Therefore, the increase in the metric suggested that investors may be aware of the downside risks. However, the same group of holders consider Bitcoin an asset worth waiting for the returns.
Source: Glassnode