Bitcoin (BTC) and the broader cryptocurrency market tumbled towards the end of December 31, wiping out intraday gains to end a wildly successful year on a weaker note.
market update
The price of BTC dropped below $46,000 on December 31 and was last seen hovering below that level, according to data from Cointelegraph Markets Pro and TradingView. The core cryptocurrency fell more than 5% from the intraday peak and 2.9% on the day to trade at $45,933.
Altcoins faced a similar downward trajectory to Bitcoin, with Ether (ETH), Binance Coin (BNB) and Solana’s SOL each dropping more than 2%. Cardano’s ADA dropped more than 4% for the day.
The combined market capitalization of all cryptocurrencies has dropped more than $100 billion at its intraday peak, falling down from a high of $2.4 trillion to $2.27 trillion, according to CoinGecko.
The sudden reversal followed a modest relief rally for the BTC and other cryptocurrencies that took place at the beginning of December 31st. As reported by the Cointelegraph, the price of Bitcoin has risen to more than $1,500 in less than an hour – a rally that may have been helped by December options expiration worth approximately $6 billion.
Crypto OGs keep piling up
Bitcoin is gearing up for a YTD return of less than 60%, which is far below what many, if not most, forecasters were asking for in early 2021. Although the BTC has never come close to hitting highs Six-digit valuations, the leading cryptocurrency continues to attract investors with low time preference. (Investors with a low time preference place more emphasis on their financial well-being in the distant future, as opposed to the present.)
The recent BTC price correction was largely driven by so-called crypto tourists entering the market this season. As the Cointelegraph recently reported, veteran holders are still selling record minimum amounts of BTC in late December. Meanwhile, buying activity at Coinbase appears to have increased substantially towards the end of the year.
Earlier this week, UTXO Management analyst Dylan LeClair said “The real OGs are holding tight,” in reference to long-term Bitcoin holders having a much lower internal cost than those currently selling. The average on-chain cost for long-term BTC holders is $17,825, compared to $33,890 for those currently spending their coins.
Long-term coin holders have an average on-chain cost base of $17,825, but those currently on the move spending their coins have a cost base of $33,890.
The real OGs are holding on tight. pic.twitter.com/VtxuAcZzUw
– Dylan LeClair (@DylanLeClair_) December 30, 2021
In addition to the retail-oriented class of long-term hodlers, the crypto market saw an influx of sophisticated institutional investors in 2021. Net income for cryptocurrency funds exceeded $9.3 billion in 2021, with Bitcoin accounting for more of two-thirds of that total, according to CoinShares data. These funds have recorded 16 consecutive weeks of tickets through December 13th.
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