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Posted:
- Bitcoin Fund Holdings have fallen to their lowest level in more than two years.
- The currency’s liquid supply has also decreased as short traders leave the spot market.
The number of Bitcoins [BTC] holdings in BTC Fund Holdings have fallen to their lowest level in 30 months, according to the pseudonymous CryptoQuant analyst On a chain noted in a new report.
Read Bitcoin’s [BTC] price forecast 2023-24
The BTC Fund Holdings metric tracks the total amount of major coins held in the form of investment vehicles such as trusts, exchange-traded funds (ETFs), and funds. The cumulative amount of coins held in these holdings could grow alongside the increasing interest in indirect investments.
According to data maintained by CryptoQuantOn September 8, this benchmark stood at 684,435 BTC. On a year-over-year (YTD) basis, the value of this metric has declined by 1%.
Source: CryptoQuant
While Onchained noted that the prolonged decline in fund holdings could be due to a number of reasons, he added that this “could represent a more profound change in investor sentiment or strategy.”
The analyst added that the steep decline in fund assets has occurred overall over the past year reflects cautious sentiment among investors and institutions, possibly due to regulation and concerns about market volatility.
It can also result from profit-taking or portfolio adjustments, highlighting the dynamic nature of the cryptocurrency market.
A change in the investment behavior of this group of investors could have a major impact on the price of BTC, as they control a large part of the coin’s supply.
“This development highlights the critical role of institutional investors, trusts, ETFs and funds in influencing Bitcoin market dynamics. Their actions could have a significant impact on Bitcoin’s price and market stability, reinforcing previous understanding of their significance,” the analyst opined.
Short-term holders are running for their lives as the supply of liquid assets plummets
While BTC continues to face strong resistance at the $26,000 price point, the coin’s liquid supply has fallen to a low of 4,120,775 BTCs, Onchained found it further.
How much are 1,10,100 BTCs worth today?
According to the CryptoQuant analyst, this metric tracks the portion of BTC’s circulating supply that is readily available to be traded on the market. It is usually held by short-term investors who are willing to sell their coins quickly if the price drops.
When the liquid supply of BTC decreases in this way, price volatility often results. This is because there are fewer sellers available to sell their coins when the price rises and fewer buyers available to play when the price falls. This can lead to sharp price movements, both upwards and downwards.