• Bitcoin’s 30k plunge caused short-term holders to sell and long-term holders to remain unfazed.
• Fed balance sheet has declined for 4 consecutive weeks, raising questions about inflation and stagflation.
• 20k BTC reentered exchanges following the largest Bitcoin long liquidation event of this year.
Bitcoin Price Plunge
Bitcoin’s price plunged by 30k in March 2021, causing short-term holders to sell off their holdings while long-term holders remained unfazed. As a result, many traders experienced losses as the market became more volatile.
Fed Balance Sheet Decline
The Federal Reserve’s balance sheet has declined for four consecutive weeks, dropping by $141 billion within that period. This decrease raises questions about how central banks should respond to inflation and stagflation in today’s economy.
BTC Reenter Exchanges
As a response to the market downturn, 20,000 BTC re-entered exchanges following the largest Bitcoin long liquidation event of 2021 so far which took place on April 19th. This event was also one of the biggest crypto long liquidation events of 2023 with a significant amount of Bitcoin being sold off in just one week.
Short-Term Holders vs Long-Term Holders
The strategies employed by both short term and long term holders varied significantly during this time period. Short term holders looked at this fall as an opportunity to make profits while long term holders remained stable despite the turbulence in the markets.
Cryptocurrency Response
The cryptocurrency industry responded quickly to these events with investors looking for ways to protect their assets from potential risks posed by inflation or deflation in today’s economy. The strategies employed by both short term and long term traders will continue to evolve due to changing economic conditions throughout the year and into 2022 as well.