As Bitcoin reclaims a position of about $60,000, risks of selling pressure have emerged.
Over the past 48 hours, dormant wallets have started shifting Bitcoin alongside a Mt. Gox wallet, which is conducting test transactions ahead of a transfer.
Per data shared by a CryptoQuant analyst, 29,206 Bitcoins were recently moved on-chain. A significant portion of these Bitcoins recently moved on-chain had been dormant for up to three years.
Signs of trouble
Specifically, 5684 BTC were dormant for three to six months, but the remaining 18,536 BTC had been inactive for about two to three years. The analyst noted that these funds were moved on Aug. 11, creating selling pressure for the apex cryptocurrency.
Further, an additional 4,986 BTC, which had been held for at least three to twelve months, and 2,394 BTC, which had been inactive for three to five years, were moved the following day.
The transfers accounted for over $1.7 billion in value moved in less than two days.
The CryptoQuant analyst warned that movement in “long-dormant Bitcoin” is often indicative of forthcoming selling pressure, adding:
In times of low liquidity, this can create downward pressure on prices, which could potentially continue.
Meanwhile, analytics firm Arkham Intelligence flagged in an August 13 post that a wallet, possibly linked to California-based crypto exchange BitGo, had initiated test transactions.
What’s concerning is that the exchange is a Mt. Gox creditor and had received $2.19 billion worth of BTC from the now-defunct crypto exchange two weeks ago.
The funds were subsequently moved to another wallet identified by “bc1q..53.” At the time of writing, there has been no further movement, but the value of the 33,105 BTC has dropped to $1.97 billion, as a result of BTC prices tanking over the past week.
While Arkham claims this is likely the final Mt. Gox trustee and the massive $9 billion payout is coming to an end, there’s still the risk such a move could induce fear among investors and hamper BTC’s current recovery.
There are some positives
Analytics platform Glassnode, however, observed a broader trend of holding among market participants.
According to its recent market report, following BTC’s all-time high in March, a period of “supply distribution” ensued. This market state was characterised by a lot of activity with funds being moved.
However, over the past few weeks, that trend has been showing “signs of reversing.” The pattern was most prominently noted among large wallets, “often associated with ETFs,” the report noted, adding:
These large wallets appear to be returning to a regime of accumulation.
This observation can be interpreted as a positive sign, as big players accumulating can result in strong support for BTC at current levels. Further, some market analysts are expecting greener charts.
Crypto analyst MikyBull Crypto observed in an August 13 post that the global liquidity index has just broken out of a 2-year resistance.
He noted that the correlation between Bitcoin and the global liquidity index remains quite strong, suggesting that a potentially “massive rally” for Bitcoin could be on the horizon.
Analyst Axel Adler Jr reiterated MikyBull’s optimism, stating that a bullish pattern was forming on the BTC chart.
At the time of writing, Bitcoin was trading at $60,792.52 after failing to breach the $6,213 mark multiple times on August 13.
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