In a recent thread on the social media platform X, renowned on-chain analyst Willy Woo has shed light on the factors contributing to the ongoing Bitcoin (BTC) price drawdown. According to Woo, a significant portion of the selling pressure can be attributed to early, long-term BTC holders, often referred to as Bitcoin OGs, who are offloading their substantial holdings.

Woo’s analysis suggests that the influence of these OGs on the market cannot be understated, as they collectively hold a staggering amount of BTC – reportedly ten times more than all Bitcoin ETFs combined. Historically, this group has exhibited a consistent pattern of selling during bull markets, a trend that dates back to the very inception of Bitcoin.

However, the selling pressure from OGs alone does not paint the complete picture of the current market dynamics. Woo points out that the rise of futures markets, or what he terms “paper BTC,” has further compounded the situation. The availability of paper BTC has allowed market participants to engage in synthetic Bitcoin trading without actually holding the underlying asset.

Woo says this development has led to a diversion of demand from real BTC to paper BTC, with counter-traders backing their positions with USD rather than actual Bitcoin. Consequently, according to Woo, the market now experiences a more subdued response to buying pressure compared to the early days of Bitcoin, when the only sellers were a small number of OGs and miners selling newly minted coins.

Woo’s analysis also highlights the significant impact of paper BTC on recent market trends. He notes that the 2022 bear market was primarily driven by an influx of paper BTC, even though spot holders did not engage in substantial selling. As he points out, similarly, during the current bull market, periods of increased paper BTC have coincided with stagnant price action.

Woo emphasizes that synthesizing these various data points is more of an art than a quantifiable science and that market analysts are ultimately making educated guesses based on the available information.

In a video released earlier today, crypto analyst Michaël van de Poppe, also known as “Crypto Michaël,” explored the reasons behind the ongoing crash in altcoin prices and shared his outlook for the cryptocurrency market.

Michaël began by addressing the significant downturn in the altcoin market, noting that some major altcoins have dropped over 40% in the past two weeks, while on-chain altcoins have plummeted by more than 70%. He emphasized the inherent volatility of altcoins, which often experience rapid gains followed by sharp corrections.

A primary factor in the current crash, according to Michaël, is the uncertainty surrounding spot Ethereum ETFs in the U.S. Although the U.S. SEC has approved these ETFs, they are not yet listed, creating confusion and negatively impacting market sentiment. He explained the two-part approval process involving the 19b-4 forms (covering technical details and SEC compliance) and the S1 forms (pertaining to the actual exchanges listing the ETFs). The delay in listing has added downward pressure on the market.

Michaël suggested that the approval of spot Ethereum ETFs would likely classify Ethereum as a commodity, similar to Bitcoin. This classification could lead to increased institutional investment and broader acceptance of Ethereum and other cryptocurrencies.

He also discussed the impact of recent macroeconomic data, such as the U.S. Consumer Price Index (CPI) and the U.S. Producer Price Index (PPI). Both indicators showed lower-than-expected inflation, initially hinting at a potential end to rate hikes by the Federal Reserve. However, the Fed’s more hawkish stance has resulted in continued uncertainty. Michaël stressed that altcoins thrive in environments with low interest rates and high liquidity, conditions that are currently unmet.

Michaël addressed the strength of the U.S. dollar and its impact on the cryptocurrency market. A strong dollar typically leads to weaker performance in risk-on assets like cryptocurrencies. He added that recent rate cuts by the European Central Bank (ECB) have further strengthened the dollar, exacerbating the pressure on the crypto market.

Despite the current downturn, Michaël remains optimistic about a potential market reversal. He believes that the listing of spot Ethereum ETFs in the U.S., expected within the next few months, could be a significant catalyst for a bullish trend. He mentioned that historical patterns, such as the price action following the approval of the Bitcoin ETF, suggest that initial corrections could be followed by substantial gains.

Finally, Michaël highlighted the importance of Bitcoin dominance and its impact on altcoins. With Bitcoin dominance currently high, altcoins are underperforming. However, he anticipates that a reversal in Bitcoin dominance could signal the start of a new altcoin rally.

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