Bitcoin On-Chain Data Highlights Steps BTC Takes to Exit Bear Market

[ad_1]

The latest Glassnode analysis suggests that Bitcoin has built a strong foundation below the $30,000 level, and the current supply structure bears similarities to early 2016 and early 2019.

The report shows that the long-term holder supply (LTH) is just short of a new all-time high with a total supply balance of 14.161 million BTC. In contrast, short-term holders (STH), who acquired coins after the failure of FTX, saw their supply balance of 2.914 million BTC remain relatively constant in 2023.

Long-term holders unfazed despite major downturns

As of April 12, 155 days have passed since the collapse of the FTX exchange on November 8, 2022. The 155-day mark is crucial as it is the minimum length of time a Bitcoin holder must have held their coins for be classified as a long-term holder (LTH).

Thus, the supply distribution can be divided into two halves, the first, before the FTX collapse to represent the LTH supply and the other after, to represent the short-term holders.

Supply of long/short term Bitcoin holders. Source: glassnode

The report also drew a comparison of previous market cycles based on the behavior of LTHs expressed through changes in their supply. He noted that currently Bitcoin is experiencing a period of patience plateau, where the supply of LTH tends to hover around its ATH, often for several months to over a year.

He added that the supply structure also has similarities to early 2016 and early 2019. Notably, while Bitcoin price did not reach new lows in 2016 and 2019, the real did not start for 18-24 months at the end of 2020 and 2021. The Parabolic Rise period typically witnesses a rapid spike in the percentage of LTH holdings in earnings, followed by profit taking.

Supply of long-term and short-term holders in profit. Source: glassnode

Year-to-date Bitcoin price strength is supported by an explosive rise in coins held at profit. The report adds that bear market floors are characterized by large scale capitulation which also sees an equal and opposite influx of demand to absorb it.

Related: Bitcoin On-Chain Data Highlights Key Similarities Between 2019 and 2023 BTC Price Rise

As prices move higher out of the lower formation zone, all of these coins become profitable again. In 2023, a total of 6.2 million BTC returned to profit, representing 32.3% of supply, indicating a strong buyer cost base below $30,000.

Bitcoin supply percentage in profit. Source: glassnode

The long-term holder’s supply is a crucial factor to consider when analyzing the market and Glassnode emphasizes the importance of patience in a market cycle. Bitcoin’s current supply structure indicates that while a bull run won’t arrive soon, BTC is unlikely to visit prices below the $15,500 level.

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

[ad_2]