Crypto Market Witnesses $2.5 Billion Inflow Following Recent Downturn

The past week was largely defined by the Bitcoin price climbing above $45,800 for the first time in over 20 months, marking a great start to the year. However, the premier cryptocurrency soon experienced a sharp price pullback due to negative news about the BTC spot (ETF). 

Interestingly, the latest on-chain data has revealed that investors seem not to have completely lost faith in Bitcoin, the largest cryptocurrency by market capitalization.

$2.5 Billion Flows Into Crypto Market Following Bitcoin Crash

In a post on the X platform, crypto analyst Ali Martinez has offered on-chain insight into the aftermath of the crash that affected Bitcoin and the entire crypto market. The pundit noted in his post that a substantial amount of funds flooded back into the sector a day after the market downturn.

This revelation was based on on-chain data from blockchain analytics platform Glassnode. The relevant indicator here is the “positive 30-day capital inflows”, which tracks the net influx of capital into the crypto market over a 30-day period.

Chart showing aggregate market realized value net position change | Source: Ali_charts/X

The chart above shows that a significant amount of funds have been entering the cryptocurrency market over the past few months. According to Glassnode’s data, more than $2.5 billion flowed back into the cryptocurrency market on Thursday, January 4, bringing the positive 30-day capital inflows to about $27.5 billion.

This latest inflow of capital into the market offers insight into the positive shift in sentiment and market condition. It basically signals renewed investor confidence in crypto assets following a short period of uncertainty and price correction. 

As of this writing, the Bitcoin price stands at $43,661, reflecting a 0.2% decline in the past 24 hours. However, the market leader seems to be recovering well, with $44,000 not too far out of reach.

How BTC Holders Reacted To The Market Downturn

A recent analysis shows how various classes of Bitcoin investors reacted to the negative ETF news and the subsequent decline. This evaluation was based on the Spent Output Age Bands USD (SOAB) indicator on the CryptoQuant analytics platform.

The investors were divided into five classes based on the age of their holdings. According to the analysis, short-term holders who fell within the 1-week-to-1-month and 1-month-to-3-month classes exited the market at break-even and profits, respectively.  

Meanwhile, long-term holders who purchased Bitcoin in the first half of 2023, falling between the 6-month-to-12-month class, dumped about $7.6 billion worth of BTC. The 1-year-to-5-year holder class, on the other hand, barely made a move after the market downturn.

Bitcoin price at $43,690 on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView

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