The state of the Bitcoin market has raised concerns from traders who seek to tell if it is turning into a bearish market or accumulating momentum for a bullish run.
Glassnode Insights have published an on-chain analysis about the current market trend and the overall spending behaviour of Bitcoin holders. This analysis serves as a gauge of the relative sentiment of short-term and long-term holders.
BTC faced a selloff this week as it started out within the $31,327 range, peaked up to hit a new weekly high of $40,757 before racing down to a low again. The data from Glassnode has placed the threshold for long-term Bitcoin holders at 155 days ago and for short-term holders later than 155 days. This indicates that the threshold for long-term holders begins from any period before 2021 or early January.
According to the analysis, both classes of holders have experienced some level of profit and some level of losses, depending on when they took to the market. Long Term Holders (LTHs) in profit who bought into Bitcoin prior to 2021 hold about 69 percent of the total BTC supply. LTHs in loss hold only a mere 0.5 percent of BTC’s supply.
The Short Term Holders (STHs) hold about 30.5 percent of the total BTC supply, with STHs in profit holding only 4.5 percent of the profits and the rest in loss holding over 26 percent. In essence LTHs are in majorly the ones basking in profit, however this can’t be counted for long as they are closing in on the NUPL threshold of 0.75 which is historically the start of a bearish cycle.
BTC Spending Patterns
Spending patterns are vital to be examined as pain points have been identified. This is to grasp the intention of whether an Investor is defiant on the market or will flee seeing the sight of red candles. Glassnode offers more insights using Average Spent Output Lifespan metric (ASOL) to examine the average age of Unspent Transaction Outputs (UTXOs) spent that day.
The spending behaviour of old coin holders peaked in the early weeks of the May market capitulation. However, the ASOL metric fell low which indicated that LTHs did not panic sell, they held through the deep.
Since it has been established that LTHs are hodling through the dip as the metrics have examined, it becomes necessary to know who is selling.
The Liquid and Illiquid Supply metric indicates over 155,000 Bitcoins were liquidated in the month of May as Stablecoins peaked higher. The metrics indicated that sell pressure on STHs as they consistently incurred losses in the sell of accumulated assets.
Long-term holders are perceived to have taken profit after the 2020 BTC rally that saw the value move from $10k to $42k, and bought back again. Despite the turbulent market trends they weren’t likely to sell at loss, however STHs increased their sell rate by five times as the capitulation event heightened.
In all, it would be safe to say that the current market trend is a field for the experienced LTHs and the faster-paced STHs for either a bull or bear take.