The most recent data from Glassnode presents a thorough examination of the impact of bitcoin’s long-term holders (LTH) on the cryptocurrency market. In their latest onchain report, researchers delve into key metrics and behaviors of LTHs in order to comprehend supply and demand dynamics.
According to Glassnode’s analysis, bitcoin (BTC) has been trading sideways following its all-time high of $73,794 in March. As of early May, the demand momentum had turned negative, indicating a potential bearish trend. The analysis of short-term holders (STH) revealed significant capital outflows during this period.
The report particularly emphasizes the significance of long-term holders in the market. Despite representing only 4% to 8% of daily onchain volume, LTHs account for 30% to 40% of cumulative profits realized during bull markets. This highlights the wealth concentration among older coins and the gradual return to long-term holders over time. Glassnode’s report states:
This finding underlines the concentration of wealth in older coins gradually paying back the diamond hands over the bull market.
In terms of demand tracking, the report outlines a methodology using the cost-basis of various age brackets within the STH cohort. This approach helps identify capital flows into and out of the market, providing insights into investor behavior during different market phases. Glassnode’s data suggests that the current market structure, characterized by spot prices falling below cost-basis levels, has historically led to investor confidence deterioration.
“Since mid-June, the spot price has plunged below the cost basis of both the 1w-1m holders ($68.5k) and 1m-3m holders ($66.4k),” Glassnode’s study details. “If this structure persists, it has historically resulted in a deterioration of investor confidence, and risks this correction being deeper and taking longer to recover from.”
Glassnode’s analysis also examines the behavior of LTHs during different market phases. The study highlights the increased frequency of high-spending days by LTHs during the euphoria phase of bull markets. “This highlights the relatively consistent behavior pattern of long-term investors taking profits during periods of rapid price appreciation,” the report concludes.
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