Glassnode: Short-Term Bitcoin Buyers Turn Long-Term Holders

Over the past week, long-term holders of Bitcoin have increased their selling to levels indicative of reduced market risk, but holding remains the dominant investment strategy.

Uncertain macroeconomic winds likely contributed to the increase in long-term holder selling last week and caused some short-term holders to dump their positions, according to blockchain analytics firm Glassnode. Coins older than six months accounted for 5% of total spending last week, a level not seen since November.

The number of short-term holders (STH) who held tokens for less than 155 days continued to decline, but not necessarily due to selling. According to Glassnode, while STH sell-offs are more common in general, the recent drop in STH supply "can only happen when a significant amount of token supply is dormant and exceeds the 155-day age threshold to become long-term holder supply" .

While there is always selling pressure, the accumulation pattern in Bitcoin (BTC) does not yet indicate bearish behavior. Additionally, despite the recent increase in sell-offs, more than 75% of Bitcoin’s circulating supply has been dormant for at least 6 months. According to Glassnode, this shows that investors are still dominated by holders.

Glassnode notes that the sell-off has entered into a relatively strong market that has avoided any major up-and-down moves, remaining range-bound for most of the year. This is considered to be a capitulation event that often occurs at the end of a bear market cycle in order to avoid it. According to data from CoinGecko, there hasn’t been a massive sell-off since last May, when BTC prices fell from $58,771 to $34,977 in 15 days.

From the sell-off event in May to October was the last period in which BTC accumulated bear market-like behavior.

The break-even ratio for STH supply remains close to the all-time lows reached in mid-2021. At present, 82% of STH coins are in a loss state. Glassnode said that this is a sign of the late stage of the bear market. Smart investors will transfer their coins to cold wallets and wait for the profit to return to a positive level.

As noted in last week’s BTC market update, outflows from exchanges remain fairly high. Coinbase saw its largest outflow in nearly five years last week, with 31,130 BTC leaving the exchange. These outflows are a sign of bitcoin's growing reputation as a must-have asset in the modern investor's portfolio, and investors' reluctance to rush into cash.