IntoTheBlock sheds light on the market's unanticipated decline in Bitcoin, especially after the Bitcoin ETF was approved.

According to information provided by blockchain analytics company IntoTheBlock in an X post on January 19, Bitcoin (BTC) values have dropped by almost 10% over the last week, defying a lot of market forecasts. Numerous important reasons are contributing to this trend, according to the firm's analysis.

Over the last six weeks, centralized exchanges have seen a notable surge in Bitcoin inflows, with net deposits of about $2 billion since December. The question of who is selling and why is raised by this pattern of significant exchange deposits, which usually signals a selling tendency.

The movement of earlier Bitcoin was also covered by IntoTheBlock; it recently saw an all-time high in the average holding period before a transaction. This pattern was especially noticeable on Monday and implies that long-term investors, maybe those in the Grayscale Bitcoin Trust (GBTC), are starting to shift their holdings, which might be a sign of a sell-off.

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Additional investigation reveals a change in Bitcoin holdings across different wallet sizes. In January, wallets holding more than 1,000 Bitcoin saw an increase in holdings, while wallets holding less than 1,000 Bitcoin saw a decrease in holdings. Wallets that have kept Bitcoin for a duration spanning from the previous month to the last 12 months are the main ones that have seen this alteration.

Long-term Bitcoin holders have also somewhat decreased their total holdings, which is a departure from the usual pattern of increase seen in prior months. On the other hand, since October 2023, short-term traders have observed a discernible rise in Bitcoin holdings—a pattern that is frequently connected to bull markets. This change in ownership from long-term to short-term, nevertheless, can occasionally indicate a market peak.

The overall picture of the Bitcoin market is not wholly negative, despite these developments. The current state of affairs is distinguished from prior bull markets by a deficiency in trade volume. In addition, the little decline in the balance of long-term investors and the comparatively low Market Value to Realized Value (MVRV) ratio of 1.88 indicate that Bitcoin may be going through a transitory phase as opposed to entering a substantial bear market.