Recent on-chain data shows that a relevant class of Bitcoin investors known as long-term holders have continued to exit their positions in the market.
LTHs are actively shifting to distribution
In a Nov. 1 post on social media platform shared an insight into the structural bias prevalent among long-term Bitcoin holders. Kesmeci’s analysis relies on the net long-term holder position change metric, which tracks the net buying or selling behavior of long-term Bitcoin investors over a 30-day period.
Related Reading: Bitcoin at ‘Do or Die’ Level as Cycle Faces First Real Test: Analyst
A positive reading is often interpreted as a sign that LTH is in a net accumulation phase, as there are more market participants within this class of investors buying Bitcoin than those selling. On the other hand, when the long-term holder’s net position change metric is negative, it means that LTHs are in a distribution phase.
Kesmeci explained in his post that there has been increasing momentum towards the sell side of the metric. In the highlighted chart, it appears that around 400,000 BTC have been sold in the last 30 days. Interestingly, LTHs do not appear to be declining in sales, a behavior that is also a source of concern.
In the event that long-term Bitcoin investors desist from selling their holdings, Bitcoin could reach a local price floor, as this typically indicates renewed interest and “smart money” positioning for the next cycle. However, if this distribution momentum continues to grow, the top cryptocurrency could continue to fall as its long-term holders continue to inject more bearish pressure.
LTH supply drop of 2.2% relatively modest: analyst
In another post from X, crypto expert Darkfost shed light on the implications of Bitcoin’s LTH behavior change. According to the analyst, the “modest reduction” of 2.2% in Bitcoin LTH supply in October is not much to worry about, especially when compared to the levels seen in 2024.
In March 2024, Bitcoin’s LTH supply fell by approximately 5.05%. In December, there was an even bigger drop, of around 5.2%. Darkfost hinted that the current distribution the market is seeing could therefore be the result of early profit taking, where the market could soon see a Bitcoin price rally.
However, the trend of long-term holders’ net position is one that should be monitored, as a pullback towards neutral readings could signal the beginning of an accumulation phase and subsequent upward price reversal.
At the time of writing, BTC is valued at approximately $110,750, with no significant movement in the last 24 hours.
