Numerous metrics could be used to determine the highs and lows of cycles, but boundary holding waves made are rarely mentioned in the bunch.
Also known as HODL waves, the metric represents the bundle of all active supply age bands. In the chart below, each colored band shows the percentage of all Bitcoin in circulation that last moved within a given time period, weighted by its realized price.
Data from Glassnode has shown that 80% of Bitcoin’s circulating supply is held by long-term holders (LTHs). Defined as users who have owned Bitcoin for at least six months, LTHs are typically the ones that form strong support for Bitcoin market cycle bottoms.
LTHs are considered “smart money” in the Bitcoin markets and are usually seen accumulating Bitcoin during suppressed markets. Once a bull market is established, the LTHs are the ones that distribute the accumulated Bitcoin and take most of the profits.
On-chain data strongly supports this theory. The chart above clearly shows that every time Bitcoin claimed a new all-time high (ATH), LTHs sold their holdings. During each cycle bottom, LTHs are the hodlers of last resort, providing Bitcoin with strong support.
Glassnode’s analysis of short-term and long-term headline supply in profit and loss further supports this claim.
The chart below shows that 80% of the Bitcoin supply is held by LTH, which are marked in blue. The remaining 20% of the supply is held by short-term holders (STHs) and is marked in red. Overlapping the blue and red areas of the chart with Bitcoin price movements shows that LTH hardly capitulated this market cycle: their holdings fell from 82% to 80% of supply.
The 2% decline is considerably lower than what we have seen in previous cycles, showing that the market has been making lower highs. As these lower highs bolster the strength of the network, LTHs seem to bolster their belief in the value of Bitcoin. The bear market that began in May saw only a small percentage of the Bitcoin supply move from LTH to STH as LTH saw it as an opportunity to stay or continue to accumulate Bitcoin.
While the ongoing bear market looks eerily similar to all bottoms from previous market cycles, it is still too early to tell if the industry is about to head in a more bullish direction. However, if Bitcoin has bottomed out this cycle, we could expect a recovery in the coming weeks.
Posted in: Bitcoin, Research
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This post Long-term holders own 80% of all Bitcoins
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