Bitcoin Long-Term Holders Accumulating as Dominance Hits 56%, Glassnode Reports

A recent Glassnode report reveals that long-term holders remain unwavered by recent price action.  

Bitcoin’s dominance surged to a new grip at 56% of the entire crypto market cap. The rise in dominance marks shifts in investor sentiment, potentially reshaping the cryptocurrency landscape. 

The rise in the BTC dominance is substantial from the 38.7% realized in November 2022. The shift follows the complexity of market volatility, institutional interest, and macroeconomic factors. 

Investors Accumulate BTC as Dominance Peak

The Glassnode report indicates long-term BTC holders are navigating the recent turbulent price action to portray unwavering conviction. The steadfast investors are accumulating and holding onto the Bitcoin, Glassnode report shows. 

Glassnode illustrates that the hodling behavior outpaces the spending behavior. The trend is evident in the rapidly increasing long-term holder supply, mainly involving coins bought during the March 2024 peak. 

HashKey Global’s head, Ben El-Baz, attributes the surge to growing confidence among mainstream investors as BTC market dominance edges historical highs. 

The managing director notes that the present market context features investors more inclined to choose BTC as a stable investment. Despite the potential for higher returns, investors overlook altcoins, including Ethereum, for their volatility. 

The report portrays interesting dynamics experienced by the short-term holders for the realized and unrealized losses. The report discloses that the STH-MVRV ratio, which measures the financial stress of recent buyers, tumbled below the 1.0 equilibrium. It portrays the average new investors who have experienced unrealized losses. 

The report warns that the loss magnitude is minimal for unrealized and realized losses relative to other bottom-forming events. Such suggests a potential overreaction to the present market shifts. 

Dominance Implications for Crypto Space
The shift witnessed towards BTC dominance is not isolated, as Elastos, the executive of business development, Jonathan Hargreaves, observes. The global head illustrates that the dominance has broader implications for the entire crypto ecosystem.

The present BTC dominance can stimulate overall growth in the crypto market by stimulating expansion within the entire ecosystem. The expansion is favorable, unlike the mere reallocation to Bitcoin, Hargreaves explains. 

Hargreaves emphasizes the essence of Layer 2 solutions and guarantees interoperability between Bitcoin and Ethereum networks. Such achievement will foster widespread growth across the sector. 

Hargreaves points to the macroeconomic environment as having a critical role in Bitcoin’s ascendancy. El-Baz echoes this perspective, pointing to the anticipated rate cuts by the US Federal Reserve (Fed) next month. A favorable political climate linked to the upcoming US presidential election is also critical.  

The sentiment features within the Glassnode data reveal a positive net capital inflow for BTC, ETH, and stablecoins. However, only 34% of the days have seen a higher 30-day USD inflow, though the market has contracted since the March peak. 

Experts observe that the rising tide of BTC dominance may result in unequal lift to some boats. LightLink chief executive Roy Hui rules out the rise in Bitcoin dominance, causing a substantial shift to altcoins. 

Hui advocates for strategic interoperability to realize sustained growth and market integration. Notably, the LighLink executive considers partnering with the Web2 companies would yield a key catalyst. 

El-Baz warns that altcoins led by ETH could experience even more significant challenges in the remainder of 2024 and 2025. The Glassnode data reflects this sentiment with an apparent Ethereum dominance tumble from 16.8% to 15.2%. The altcoins have declined from 27.2% to 21.3%.

Experts believe that the upcoming political events as the US election edges closer add complexity. The industry is hopeful that pro-crypto candidates will win after the spell of enforcement by the US Securities and Exchange Commission (SEC).

BitsCrunch chief executive Vijay Pravin Maharajan indicates that the November election adds complexity to Bitcoin’s growing dominance. Nonetheless, he suggests that Bitcoin should become a US reserve reserve asset.