Bitcoin price reverses gains on New Year’s Eve; hodlers continue stacking sats

The Bitcoin (BTC), and the wider cryptocurrency market, fell later in the day on December 31, wiping out intraday gains. This was to close out a very successful year that ended on a lower note.

Market Update

According to TradingView and Cointelegraph Markets Pro data, the BTC price dropped below $46,000 on December 31. The price of the flagship cryptocurrency has fallen more than 5% since its intraday peak, and 2.9% on the trading day at $45,933.

As the year winds down, Bitcoin’s price has been on the defensive. Source: Cointelegraph Markets Pro

Altcoins also experienced a downward trend, with Ether (ETH), Binance Coin(BNB), and Solana’s SOL all falling more than 2%. Cardano’s ADA fell more than 4% during the day.

According to CoinGecko, the combined market capitalization for all cryptocurrencies fell by more than $100 billion from its intraday peak. It dropped from $2.4 trillion to $2.27 Trillion.

The crypto market cap fell more than $100 billion since its intraday peak. Source: CoinGecko

This sudden reversal occurred after a small relief rally for Bitcoin and other cryptocurrencies, which took place on December 31. Cointelegraph reported that Bitcoin’s price rose by more than $1500 in under an hour. This rally may have been helped by the December options expiry event, which is worth approximately $6 billion.

Similar: Price analysis 12/31 – BTC, ETH and BNB, SOL. ADA, XRP. LUNA, AVAX. DOT. DOGE.

Crypto OGs continue to accumulate

Bitcoin expects a year-to date return of less than 60%. This is far below what most prognosticators expected at the beginning of 2021. Although BTC has never been able to achieve six-figure valuations, it continues to be a popular cryptocurrency that attracts investors with a low time preference. Investors who have a low time preference are more concerned about the future than the present.

BTC’s recent price correction was largely due to so-called crypto tourists, who entered the market in summer. Cointelegraph reported that veteran holders still sell record-low amounts (as of December) of BTC. Coinbase’s buying activity seems to have increased significantly towards the end of 2018.

Dylan LeClair, a UTXO Management analyst, stated earlier this week that “The true OGs” are holding on to their Bitcoins. This was in reference to the fact that Bitcoin’s long-term holders have a lower on-chain costs basis than those who are selling. Long-term holders of Bitcoin have an average on-chain cost basis of $17,825 as opposed to $33,890 for those who are currently spending their coins.

The average cost basis for #Bitcoin long-term holders is $17,825, while the cost basis for those currently spending their coins is $33,890. True OGs are still holding on.
Dylan LeClair (@DylanLeClair_ December 30, 2021

Related: Top 5 bullish Bitcoin stories for 2021

The crypto market witnessed a rise in sophisticated institutional investors in 2021, along with the long-term hodlers and retail-oriented traders. According to CoinShares data, net proceeds from crypto funds exceeded $9.3Billion in 2021. Bitcoin accounted for more than two-thirds. Through December 13, these funds saw 16 weeks of consecutive inflows.