During every cycle bottom, long-term holders are the holders of last resort, providing Bitcoin with strong support. 80% of Bitcoin is in the hands of long-term investors, research shows.
Numerous metrics could be used to determine cycle tops and bottoms but realized cap HOLD waves are rarely mentioned in the bunch. Also referred to as HODL waves, the metric represents the bundle of all active supply age bands.
Data from Glassnode have shown that 80% of Bitcoin's circulating supply is in the hands of long-term holders (LTHs), reported Cryptoslate. Defined as users holding Bitcoin for at least six months, LTHs typically form strong support for the bottom of the Bitcoin market cycle.
LTHs are considered to be “smart money” in Bitcoin markets and are usually seen accumulating Bitcoin during suppressed markets. Once a bull market sets in, LTHs are the ones distributing the accumulated Bitcoin and taking most of the profits. On-chain data strongly support this theory. Every time Bitcoin set a new all-time high (ATH), LTHs sold off their holdings. At the bottom of each cycle, LTHs are the holders of last resort, providing Bitcoin with strong support.
Glassnode’s analysis of long and short-term holder supply in profit and loss further supports this claim. The data show that 80% of the Bitcoin supply is in the hands of LTHs. The remaining 20% of the offer belongs to short-term holders (STH). In this market cycle, LTHs hardly capitulated—their assets fell from 82% to just 80% of the supply.
The 2% decline is significantly smaller than what was seen in previous cycles, showing that the market was making lower highs. As these lower highs reinforce the strength of the network, LTHs seem to be bolstering their faith in the value of Bitcoin. The bear market that began in May saw only a small percentage of the Bitcoin supply move from LTHs to STHs as LTHs saw it as an opportunity to either store or continue to accumulate Bitcoin.
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