On-chain data shows Bitcoin long-term holders continuing to ‘soak up supply’ around $30K. With the market slowly approaching a new, more stable price level, we look at how this could potentially affect traders and miners in 2020.
The “total supply held by long-term holders glassnode” is a new metric that shows the amount of Bitcoin that has been held for more than six months. This number is continuing to rise, and could be a sign of an impending price increase.
Bear markets are often characterised by a capitulation event, in which disgruntled investors quit their holdings and asset values either consolidate as inflows to the sector drop down or begin to bottom.
Bitcoin hodlers are now “the only ones remaining,” according to a new report from Glassnode, and they look to be “doubling down as prices fall below $30K.”
The number of wallets with non-zero balances has plateaued over the last month, a phenomenon that was seen during the crypto market sell-off in May of 2021, indicating a lack of fresh purchasers.
The total number of Bitcoin addresses having a balance greater than zero. Glassnode is the source of this information.
Unlike the sell-offs in March 2020 and November 2018, which were followed by an increase in on-chain activity that “started following bull runs,” the latest sell-off has failed to “inspire an inflow of new users into the area.” According to Glassnode researchers, this indicates that hodlers are driving the present activity.
Signs of a large buildup
Contrarian investors see BTC’s sideways price movement as a chance to accumulate, as indicated by the Bitcoin accumulation trend score, which “has returned a near perfect score over 0.9” for the previous two weeks.
Score for the Bitcoin accumulation trend. Glassnode is the source of this information.
High scores on this indicator during negative periods “often occur after a very big market decline as investor mindset flips from uncertainty to value accumulation,” according to Glassnode.
The concept that Bitcoin is presently in an accumulation period was picked up by CryptoQuant CEO Ki Young Ju, who asked his Twitter followers “Why not buy?” in the following tweet.
A deeper examination of the data reveals that entities with less than 100 BTC and entities with more than 10,000 BTC have been driving the current accumulation.
The aggregate balance of entities holding less than 100 BTC grew by 80,724 BTC during the recent volatility, according to Glassnode, which was “remarkably identical to the net 80,081 BTC sold by the LUNA Foundation Guard.”
Entities with fewer than 100 bitcoins own the majority of the Bitcoin supply. Glassnode is the source of this information.
During the same time period, entities with more than 10,000 BTC added 46,269 BTC to their balance, while those with 100 BTC to 10,000 BTC “kept a more neutral grade around 0.5, implying very little net change to their holdings.”
Traders are hailing Bitcoin’s latest advances as a bottom, although numerous indicators remain gloomy.
Hodlers who have been inactive for a long time are still active.
Long-term Bitcoin holders seem to be the key driving force behind the present price activity, with some aggressively acquiring and others seeing losses of up to 27%.
Long-term Bitcoin investors have exhausted their production profit ratio. Glassnode is the source of this information.
Despite some long-term holders selling, the total supply held by these wallets just hit an all-time high of 13.048 million BTC.
According to Glassnode,
“Unless there is major coin redistribution, we may anticipate this supply measure to begin growing over the next 3-4 months, indicating that HODLers will continue to progressively absorb and hoard supply.”
Although recent volatility may have driven away some of the most devoted Bitcoin investors, data suggests that the vast majority of genuine investors remain hesitant to spend their supply “even if it is presently held at a loss.”
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
The “glassnode vs cryptoquant” is a data visualization on-chain that shows Bitcoin holders continue to ‘soak up supply’ around $30K.
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