The latest Bitcoin price dip, according to Meltem Demirors, is an adjustment that is filtering out the paper hands.
For first-time investors, the significant decrease in Bitcoin’s (BTC) price from its very all-time high in April may be worrisome. Nonetheless, CoinShares chief strategy officer Meltem Demirors believes that the majority of long-term investors are not fleeing, and that this is only a correction to filter out panic sellers.
Demirors told CNBC that BTC is here to stay, and that a price dip is to be expected after 200 days of the crypto market boom. “You can’t have a number going up forever,” she continued, adding:
“What we’re seeing is a correction, a contraction, and a lot of what is getting shaken out is what we call the paper hands, the weak hands.”
A popular market term for an investor who can’t stand excessive financial risk and sells as soon as the asset price begins to fall is “paper hands.” It’s the polar opposite of “diamond hands,” which simply refers to a holder that can withstand market pressure.
Demirors stressed that Bitcoin has always been a volatile asset class, regardless of the fact that the crypto market, excluding Bitcoin, is up 200 percent for the year. “I’m not going anywhere even if we go to $20,000.
Last March, we were at $3,000 for Bitcoin,” she said, adding that “we have to keep the context in mind.”
Several retail investors who didn’t do their homework are selling, while long-term investors are waiting. “If we look at on-chain activity, wallets that have been holding for a long time have actually been using this opportunity to accumulate,” she added.
The data from Glassnode corroborates Demirors’ hypothesis. BTC addresses that do not sell the coins they amass, according to its data, have boosted their assets since April’s all-time highs.
With the uncertainties at the macro scale, Demirors expects to see stabilization at the current price level. “There’s a lot of uncertainty around policies. There’s also a lot of negative headlines,” She stated.
Meanwhile, Bitcoin is heading for its worst quarter since the start of the 2018 bear trend, according to crypto data aggregator Skew. Data shows that Bitcoin is down nearly 46% for the quarter, the weakest quarter since Q1 2018.