This article is from: Encryption Valley Live, original author: Glassnode, translation/editing: Zheng Qirui, forwarded with authorization.

Bitcoin prices traded down more than 26.1% this week as a series of tweets from Elon Musk raised concerns about the power consumption of mining. After opening the week at a high of $59,463, the tweet saw Bitcoin price slip to $43,963.

Musk’s tweet addresses the negative externalities of energy consumption and posits that 10x scaling and larger blocks on Dogecoin are a viable alternative. Unfortunately, this has caused widespread confusion in the market, although for many Bitcoin HODLers, this is just another day of calm.

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Measure the size of the correction

First, we will assess the size of this correction compared to the 2017 and 2021 bull markets. The current correction is 28% below the ATH of $63.6k on April 13.This is the deepest correction in the current bull market, yet coincides with five major retracements in the 2017 bull market.

In terms of bull market duration,The 2021 primary bull run has lasted about 200 days, which is relatively short compared to 2017's year-long bull run.

• In 2016, after a 2-year bear market, the retracement after the rally left the bottom.

• In 2019, after a 1.5-year bear market, the pullback after the rally was largely driven by leveraged short sellers being squeezed.

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Panic selling by new entrants

Panic selling by new entrants to the market, inflicting heavy losses on them, with both aSOPR and STH-SOPR falling below 1.0 again. Both metrics take into account the degree of profit achieved by cryptocurrencies moving on-chain, with higher numbers indicating profitable coins are moving, while values ​​below 1.0 indicate that most coins end up at higher prices move.

The aSOPR metric takes into account the entire market, while also filtering out all coins with a lifespan of less than 1 hour (these coins are usually temporary ticks and thus not economically important). STH-SOPR filters only cryptocurrencies less than 155 days old and thus represents entities buying cryptocurrencies during the current bull market cycle.

Both metrics have dropped below 1.0, indicating that overall losses have been realized on-chain, with the effect being most pronounced in STH-SOPR. This is the second time STH-SOPR has fallen below 1.0 in this correction,Indicates panic selling by a large number of new holders.

The total number of addresses holding non-zero BTC balances has also retreated 2.8% from its recent all-time high of 38.7 million addresses. In total, 1.1 million addresses sold all of their cryptocurrency holdings during this adjustment,There is evidence that panic selling is currently underway。

If we look at the cyclical patterns in the total supply held by short-term holders (STH), we can also see that a pattern of panic selling is playing out, similar to what was observed at the macro peak in 2017. What this graph shows is that the Bitcoin market tends to find a local or macro peak when new holders own a relatively large proportion of the total supply (i.e. larger cryptocurrency supply held by newer addresses ).

However, it is important to note that the current peak of STH-owned cryptocurrencies is significantly lower than in 2017, both in terms of number of cryptocurrencies and percentage of circulating supply.The cryptocurrency from new holders recently reached 28% of the circulating supply (5.3M BTC),9% less than the peak in 2017。

Given that Bitcoin trades at a larger market valuation, which may reflect greater capital inflows, which require an advantage in market cap size. It may also provide an indication that this could be a retracement on a larger timeframe in the bull cycle as the weak capitulate,first level title。

Exchange Traffic Dynamics

Given our observations of panic selling, total BTC inflows to exchanges reached a notable high, with a net inflow of 27,500 BTC observed at the start of this latest correction phase. This is second only to the March 2020 sell-off and the 2019 PlusToken Ponzi scheme in size.

However, if we break this observation down to the two largest exchanges, Binance and Coinbase, we can see two different realities.

Binance, which primarily uses non-U.S. citizens and is the venue of choice for retail investors, was the main recipient of this net inflow. We can also see that both inflows and outflows have increased in size over the past few months, suggesting that the macro sentiment among Binance users is volatile. This further shows that,on the contrary,。

on the contrary,Since Coinbase broke through the $20K ATH last cycle, BTC has almost completely net outflow，This trend continued this week. Coinbase is the venue of choice for U.S. institutions, and given the typical daily withdrawal size (10,000 to 20,000 BTC/day), this suggests that in this adjustment,first level title。

Long-term holders are buying on this dip

In almost the exact opposite of panic selling by new entrants, long-term holders appear to be buying the dip and accumulating cheaper cryptocurrencies. While the number of non-zero addresses fell in this correction, the number of addresses in accumulation has increased by 1.1% since the most recent low. Accumulation addresses are defined as those that have at least two buy transactions, but never sell any cryptocurrency.

Likewise, cryptocurrencies held by long-term holders (LTH) are back in growth mode, which again resembles the 2017 macro top. This chart primarily reflects buyers who bought cryptocurrencies in late 2020/January 2021 but have not yet sold. As the supply of LTH starts to rise, this shows that the amount of cryptocurrency maturing beyond the 5-month dormant period exceeds the amount of old coins sold for profit.

The current supply of LTH is more than 2.4 million BTC more than the peak in 2017 (accounting for 8% of the circulating supply). This indicates,Significant amounts of cryptocurrencies have been moved to and held in illiquid cold wallets, and this trend continues。