US Inflation Impacts Bitcoin; Long-Term Holders Profit, Bullish Trend for Altcoins

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What does a Bitcoin under $50,000 mean for long-term investors?

Bitcoin’s recent upward movement cannot be ignored, despite a small correction. Let’s take a look at how BTC investors are doing after the price drop.

Fear of weak macroeconomic environment

The main catalyst for the decline was the higher than expected inflation rate in the US. Strong inflation rules out the possibility of interest rate cuts in the near future. This in turn has weighed on risky markets such as stocks and cryptocurrencies. For those who don’t know, the Federal Reserve uses the Consumer Price Index (CPI) to measure inflation in the US and calibrate its monetary policy.

Long-term investors’ profits rise

However, the slight correction should not distract from Bitcoin’s recent uptrend. The world’s largest digital currency has gained 127% in the last year and was only 28% below its all-time high at the time of publication. The result was that the majority of investors were making profits from their investments at the time of publication.

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Long-term investors (LTH), known for holding cryptocurrencies over several market cycles, saw a significant decline in loss-held holdings in the last 3-4 months, according to a report by blockchain research firm Glassnode. As can be seen, only about 6.5% of the LTH holdings were held at a loss. Interestingly, these values were last seen in the early bull market conditions in mid-2020.

It is well known that LTHs accumulate losses in bear market conditions. They then move to distribution in the early stages of the bull market. And it seems they have already started to reduce their holdings.

There was a sharp decline in LTH holdings from the peak in November 2023. However, more than 50% of the outflows could be attributed to the Grayscale Bitcoin Trust (GBTC), which also falls under the label of long-term investors. It will be interesting to track whether the sales of the LTH increase as Bitcoin approaches its all-time high of $69,000.

BTC Price Forecast 2024-25

In a statement shared with AMBCrypto, Shivam Thakral, CEO of Indian cryptocurrency exchange BuyUcoin, ruled out the likelihood of a sustained increase in the Bitcoin price in the short term. “The next few days could see a decrease in Bitcoin dominance and the start of a bullish trend for Ethereum and Altcoins.”

Sources: Glassnode, AMBCrypto, BuyUcoin

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