Bitcoin Liquidations: Debates & Dominant Holders

Bitcoin Liquidations: Debates & Dominant Holders

The current Bitcoin liquidations are no stranger to heated debates, and Bitcoin Amsterdam 2023 was no exception. Long-standing Bitcoin core developers Paul Sztorc and Peter Todd took centre stage to express their differences over Bitcoin Improvement Proposals (BIPs).

Paul Sztorc’s LayerTwo Labs has dedicated nearly six years to developing BIP-300. This proposal focuses on creating layer-2 sidechains to address various protocol issues without the need for changes to Bitcoin.

This contentious discussion underscored the challenges of achieving a consensus on BIPs. It is aimed at enhancing the overall functionality of the Bitcoin network. Even Jameson Lopp, CTO of Casa, weighed in on the debate. He expressed his concerns about the slower pace of improvements and protocol changes in the Bitcoin ecosystem.

Nonetheless, recent developments like BitVM and SpiderChain have shown promise, providing a glimmer of hope for the future. Lopp believes that a couple of proposed soft forks could benefit the Bitcoin recovery.

Bitcoin Long-Term Holders Dominate as Supply Scarcity Grows

Long-term Investors Now Control Over 76% of the Bitcoin Supply

Bitcoin’s supply dynamics are shifting, with long-term holders (LTHs) taking the reins in the market. Data from Glassnode indicates that a record portion of the available BTC supply is now locked up in long-term storage.

The percentage of free Bitcoin’s supply controlled by LTHs has surged to over 76%, the highest in the cryptocurrency‘s history. Despite increasing supply with every new block, the low-time preference Bitcoin investor group now exerts a record market presence.

This development, according to Charles Edwards, founder of Capriole Investments, marks a historic milestone for Bitcoin. LTHs have steadily increased their BTC exposure since mid-2021, holding strong even through bearish market periods.

The percentage of supply controlled by LTHs still remains high. Therefore, coins available to other market participants become scarcer, potentially driving up prices due to the supply-demand dynamics.

Short-Term Hodlers and Bitcoin Bull Run: A Delicate Balance

Bitcoin’s Short-term Holders and Their Impact on Price Dynamics

On the other end of the spectrum, long-term holders (LTHs), short-term holders (STHs) or speculators play a crucial role in Bitcoin’s price dynamics.

The realized price of the STH cohort has been a support level throughout the year. Currently, the STH realized price hovers just below $27,000, and a breach of this level may serve as a bullish catalyst for Bitcoin liquidations.

Data indicates that Bitcoin to USD has maintained $28,000 support after reaching two-month highs. As the debate between LTHs and STHs continues, Bitcoin’s price will remain influenced by the delicate balance between these two investor groups.