Bitcoin: These holders are selling at a loss and that means…

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Short-term holders were dumping their coins on exchanges at a loss. Long-term holders have amassed a significant amount of BTC over the past 24 hours.

On-chain analytics firm Glassnode took to Twitter to draw attention to Bitcoin exchange transfer patterns [BTC] short-term holders (STH) and long-term holders (LTH).

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The analysis revealed that on average, most coins flowed into loss-making trades with a negative trade entry bias of 0.7.

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When evaluating the profit-to-loss ratio (bias) of #Bitcoin deposit volume on exchanges, we note a current negative bias of 0.7, suggesting that coins are flocking to exchanges at a loss. pic.twitter.com/6dYAbsFdyg

glassnode (@glassnode) May 25, 2023

However, when the FX inflow bias was examined as a function of holding duration, a clear difference emerged between STH and LTH.

Weak hands that capitulate?

Long-term holders are participants who hold coins for more than 155 days. Commonly referred to as diamond hands, this cohort of users is considered to have high risk tolerance and will not sell despite prolonged losses.

This group recorded a positive currency inflow bias of 1.73, implying that most of their transfers to exchanges generated a profit.

Source: Glassnode

On the other hand, short-term holders, who hold coins for less than 155 days, recorded a negative bias of 0.69, indicating that these weak hands were throwing their coins on the exchanges at a loss. STHs are more likely to abandon positions due to market volatility.

It was also interesting to note that this cohort was the main contributor to overall currency inflows.

Source: Glassnode

Diamond hands were profitable

Examining the 30-day MVRV ratio clearly showed that BTC holders were underwater and would suffer losses of 4.53% on average. However, the MVRV Long/Short difference was positive, meaning that LTH would make higher profits than STH.

This observation was consistent with the aforementioned divergence in the profitability of the two cohorts.

Source: Santiment

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Long-term holders start accumulating

Much of the LTH was likely amassing more BTC coins, as evidenced by the large increase in token flow that hasn’t budged over the past year. Since the transactions resulted in higher prices, it was predictable that they were dominated by buyers.

Source: Santiment

At press time, BTC traded hands at $26,496.51, according to CoinMarketCap. The centerpiece has entered a consolidation phase, with last week’s trades hovering in the narrow $26,400-$27,500 range.

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