The downward trend in Bitcoin’s (BTC) price following its April all-time high might be worrying for first-time investors. Still, CoinShares chief strategy officer Meltem Demirors believes that most of the long-time holders are not selling, and this is a correction to weed out panic sellers.
Speaking to CNBC, Demirors underscored that Bitcoin is here to stay, and after 200 days of crypto market expansion, it’s normal to have a price drop. “You can’t have a number go up forever,” she added, stating:
“What we’re seeing is a correction, a contraction, and a lot of what is getting shaken out is what we call the paper hands, the weak hands.”
“Paper hands” is a popular market term to describe an investor who can’t endure high financial risk and starts selling as soon as the asset price begins to drop. It’s the opposite of “diamond hands,” which simply means a pressure-resistant holder.
Reminding that the crypto market, excluding Bitcoin, is up 200% for the year, Demirors said that Bitcoin has always been a volatile asset class. “I’m not going anywhere even if we go to $20,000. Last March, we were at $3,000 for Bitcoin,” she said, adding that “we have to keep the context in mind.”
She said that many retail investors who didn’t do their research are selling, while long-term holders continue to wait. “If we look at on-chain activity, wallets that have been holding for a long time have actually been using this opportunity to accumulate,” she added.
Glassnode data confirms Demirors’ point. According to its data, Bitcoin addresses that do not sell the coins they accumulate have increased their holdings since April’s all-time highs.
Demirors said that she expects to see consolidation at the current price level with the uncertainty at the macro scale. “There’s a lot of uncertainty around policies. There’s also a lot of negative headlines,” she reasoned.
Meanwhile, Bitcoin is heading for its worst quarter since the start of the 2018 bear trend, according to crypto data aggregator Skew. Data shows that Bitcoin is down nearly 46% for the quarter, the weakest quarter since Q1 2018.