A substantial portion of Bitcoin supply is moving into Long-Term Holder (LTH) status, despite recent market turbulence and a marked decrease in speculative activity, on-chain data shows.
What Happened: According to the latest Glassnode report, this trend is particularly striking given the recent market conditions.
After Bitcoin BTC/USD reached its all-time high of $73,000 in March, investors faced a challenging period of sideways price action.
“After setting the ATH in March, the confidence of new investors was tested by choppy sideways price action for several months,” the report notes.
Despite these uncertain conditions, a considerable number of investors have chosen to maintain their positions, potentially indicating a strong belief in Bitcoin’s long-term value proposition.
Short-Term Holders (STH), defined as coins held for less than 155 days, have booked looses since early July, even though the report highlights a crucial development: “The supply which remains in this age band is increasingly close to migrating into Long-Term Holder status, representing coins that are statistically less likely to be spent on a given day.”
Coins aged 3-6 months currently account for over 12.5% of the circulating supply, a structure similar to the mid-2021 sell-off and the height of the 2018 bear market.
Importantly, the report notes that “over 480,000 BTC was acquired above the current spot price and is now classified as LTH supply,” indicating that a significant portion of long-term holders are currently at an unrealized loss but choosing to hold their positions.
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Why It Matters: The Glassnode analysis points to a broader trend of market equilibrium and reduced speculative activity.
The report observes that “net capital inflows into the Bitcoin asset have begun to slow down,” suggesting a balance between investors taking profit and those realizing losses.
A significant aspect of the current market condition is the marked decline in speculative trading, particularly in the perpetual swap markets.
“There has been a marked decline in liquidation volumes in recent months, especially relative to the excitement around the March ATH. This suggests that the appetite for speculation has declined and suggests a more spot-dominated market regime for the time being,” the report states.
This decline in speculation is further evidenced by the ratio between price and net liquidation volume volatility, which is approaching levels not seen since February 2022. “Traders are less willing to take on higher-risk positions, suggesting there has been a significant reset in speculative interest.”
Investors should be wary though since “periods of quiet and calm market structure are short-lived and often precede an expectation for heightened volatility,” the report warns.
What’s Next: For investors and industry professionals seeking to understand these complex market dynamics, Benzinga’s Future of Digital Assets event on Nov. 19 offers a timely opportunity.
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