The Bitcoin market has recently experienced two major liquidation events, triggering a wave of forced selling from traders using excessive leverage, but analysts say a clear pattern has emerged.
"Short-term traders using excessive leverage were wiped out, while long-term holders quietly seized this opportunity," said CryptoQuant analyst Amr Taha on May 26.
They noted that the first liquidation occurred when Bitcoin (BTC) fell below $111,000, with over $97 million in long positions being liquidated. When its price broke the $109,000 level, an additional $88 million in long positions was wiped out in the second wave.
However, as short-term traders faced margin calls and forced selling, long-term holders (LTH) reacted very differently and increased their accumulation.
This has caused the realized market cap of long-term holders to surge to over $28 billion, a level not seen since April. Realized market cap is a measure of the value of each Bitcoin based on the last time it was moved, rather than the current market price.
Long-term investors are using this forced selling period to enhance their exposure and accumulate more Bitcoin for the long haul, Amr Taha noted. "This strategic accumulation during stressful market times reflects LTHs' deep-seated conviction."
"Instead of being shaken by short-term volatility, they [LTH] view these liquidation dips as a great opportunity to bolster their positions, strengthening the foundation for future price increases."
Bitcoin fell below $109,000
Bitcoin is trading just under $108,700 on Coinbase at the time of writing, recording a slight recovery from a drop to $107,550, according to TradingView.
However, it has pulled back from the high on Monday, May 26, of $110,000, having hit resistance twice at that level.
