Why Long-Term Investors Are Buying Bitcoin Below This Yellow Line

After weeks of trading sideways, Bitcoin BTC/USD rallied 4.60% over the past 24-hours to push past $42,633.

What Happened: In light of the recent price action, on-chain analyst Will Clemente broke down some important metrics examining who was behind this buying activity.

“Long-term holdings continue to increase while short-term holdings continue to decrease,” he said in his most recent newsletter.

“This means two-fold: short-term holders are aging past the 155-day, 5 month threshold, short-term holders are the ones that are doing most of the selling.”

According to his analysis, long-term holders now have over 66% of Bitcoin’s supply, while short-term investors are now down to nearly 20%. Incidentally, before the main bull run began in October 2020, long-term holder supply had reached just over 68%.  

Why It Matters: According to Clemente, when the market price of Bitcoin goes below realized price, it serves as a great signal to “start accumulating heavily” in macro bottoms.

“This is because price is below the average price investors paid for their coins; meaning the market is in capitulation by definition,” he noted.

Whereas reaching the orange and red lines have marked historical overheated/euphoric price levels.

Naming several instances over the years when breaking past the yellow-mid line has resulted in vertical price movement; Clemente said that crossing it once more would be an important indicator.

“Market price going above the yellow mid-line has historically been a key level for Bitcoin to confirm a strong bull market trend," he said.

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