In recent days, millions of bitcoin have changed ownership, going from weak investors to strong ones.
This is revealed on Twitter by Bitcoin Jack, who writes:
“Millions of $BTC (note: there are only ~18 million and some are lost) shifted from weak to strong hands on chain.
Billions ( $USD) in contracts on derivative exchanges shifted from weak to strong hands
Serious question, considering the limited supply, how can you be bearish?”.
Bitcoin Jack has also shown a chart with the current volume of BTC’s on-chain transactions: since December 2018, there have not been so many bitcoin traded in a single day.
The peak was on March 12th, with over 562,000 BTC traded on-chain in 24 hours.
In addition, Jack adds that if these transactions were all OTC trades, it would mean a total of 2 million BTC traded in the last few days.
It is likely that it is the high volatility of the crypto markets and enormous selling pressure that has generated such massive trading volumes.
The assumption is that this volatility may have resulted in a shift of BTC from weak hands to strong ones.
If this was indeed the case, Bitcoin Jack suggests that it would be irrational to be bearish at this time.
The point is that, during the resounding crash a few days ago, a significant number of weaker BTC owners probably exited their positions, while on the other end, those buying this huge amount of bitcoin released into the market by weak hands may have been investors with more confidence in the asset and crypto market.
The latter may be less inclined to sell their positions in the future, effectively reducing BTC’s supply in the market compared to the big sell-off in mid-March.
It is difficult to determine whether this was the scenario and find evidence to support Bitcoin Jack’s hypothesis, but given that it is, in fact, a process that has happened several times before, it seems at the very least plausible.
In fact, it should not be forgotten that, after the vertical collapse on March 13th, BTC’s price rose, albeit slightly and only over the course of days, whereas for example, the S&P 500 index continued to fall for another 10 days.
This observation makes Bitcoin Jack’s hypothesis plausible.
