? Crypto markets are bleeding red, with Bitcoin and Ethereum dropping -50% from its all-time high in November.
Time to panic? Maybe not so fast.
Crypto sector is very young, which makes its meteoric rise so remarkable, and its dips so dramatic.
Throughout its history Bitcoin has lost 50%, and even 80% of its price many times, each time coming back stronger. Why? Because the price of Bitcoin and its value are two different things. Whether it can be traded for $30k or $60k, it is still the same independent, borderless money accessible to anyone anywhere.
Very often, however, people take it for a magic get-rich-quick scheme. With crypto awareness rising, each year more and more crypto noobies throw themselves into the game, sometimes without proper understanding what the game is about. As a result, many of them sourly abandon when the price does not go in their direction.
In crypto speak these people who can’t see the bigger picture are known as paper (or lettuce ?) hands. Analysing their on-chain behaviour, notably by keeping track on the distribution of long-term coins (those that haven’t been moved for over a year), can tell a lot about the market:
↘️ when older coins’ share decreases, it means that long-term holders sell their coins to the newcomers;
↗️ when it increases, it means that long-term holders buy coins from newcomers.
CryptoQuant’s graph from this Thursday shows that the share of coins that have matured to 12-18 months is rapidly increasing, which means that paper hands who bought massively in 2021 bull run are now panicking and selling their coins, while the diamond hands ? keep their grasp.
This is all natural and shows how immature Bitcoin market still is (and will probably stay for some time). It also shows that, while paper hands tend to sell at a loss, diamond hands are in profit.
Do your math ?