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Research: Bear market cycles see long-term holders capitulate and accumulate

Research: Bear market cycles see long-term holders capitulate and then accumulate Research: Bear market cycles see long-term holders capitulate and accumulate Andjela Radmilac one day ago 2 min read

Since 2010, long-term holders have already been buying Bitcoin each and every time its price was pushed downwards and also have sold into nearly every peak.

2 min read

Updated: August 13, 2022 at 4: 06 am

Research: Bear market cycles see long-term holders capitulate and then accumulate

Cover art/illustration via CryptoSlate

Determining along market cycle requires considering days gone by behavior of its participants. With regards to Bitcoin, you can find two major currents that change the direction of its price movements long-term holders (LTHs) and short-term holders (STHs).

Long-term holders are thought as addresses which have held Bitcoin longer than 155 days. Theyre often viewed as the smart investors in the area, as the most them have withstood market volatility and were able to accumulate in the bottom and sell at the very top.

Short-term-holders are addresses which have held Bitcoin for under 155 days and so are viewed as the more price-sensitive group significantly suffering from volatility.

Considering the behavior of LTHs and STHs further corroborates this. Since 2010, long-term holders have obtained BTC each and every time its price was pushed downwards and sold into nearly every peak.

btc long term holders short term holders
Behavior of long-term holders and short-term holders (Source: Glassnode)

Recent changes in the web positions of long-term holders show they have been capitulating. Bitcoins slump, due to the Terra (LUNA) blowback and the Celsius crisis, has pushed many LTHs to market their positions.

However, LTHs selling their positions is normally taken as an indicator of market bottom.

In accordance with data from Glassnode, the sell-off that began in-may reached its peak in July and is currently tapering off. The graph below illustrates the change constantly in place for long-term holders, with the red highlights showing a reduction in the entire position and the green highlights showing a rise within their holdings.

btc long term holders position change
Net position change for long-term holders in 2022 (Source: Glassnode)

Zooming out reveals other periods that pushed long-term holders to market off their holdings. In March 2020, once the onset of the COVID-19 pandemic crushed global markets, long-term holders capitulated out of fear and uncertainty. Their capitulation tripped a sharp price drop that took until July that year to recuperate.

Another major sell-off happened between January 2021 and could 2021. However, with Bitcoin deep in a bull run, the sell-off meant long-term holders were taking significant profits.

The capitulation weve seen begin in April 2022 continues to be ongoing. Just like the one in March 2020, this capitulation in addition has triggered an enormous price drop, pushing Bitcoin right down to $20,000 for the higher section of the summer. Even though weve seen selling subdue since August began, the accumulation rate remains small.

We have been yet to see whether this is actually the start of another accumulation period and if the small uptick in the accumulation rate will overtake the sell-off. If the prior bear cycles repeat, Bitcoins price could visit a gradual rise, accompanied by a rise in the quantity of BTC accumulated by LTHs.

btc total supply long term holders
Changes in the full total supply held by long-term holders (Source: Glassnode)

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