The Growing Divergence Between Bitcoin Long-Term Holders and Short-Term Holders
Recent on-chain data reveals a significant divergence between Bitcoin’s long-term holders and short-term holders. This divergence has reached record levels, indicating a shift in the market towards HODLing.
Understanding the Two Primary Cohorts in the Bitcoin Market
In the Bitcoin market, there are two primary cohorts: the short-term holders (STHs) and the long-term holders (LTHs). STHs are investors who have purchased their coins within the last 155 days, while LTHs are those who have been holding onto their tokens for a longer period of time.
Typically, the longer an investor holds their coins, the less likely they are to sell them. This means that STHs usually have weaker conviction compared to LTHs. LTHs are known for their ability to hold onto their assets even during volatile periods, earning them the nickname “diamond hands.” STHs, on the other hand, tend to sell quickly when fear, uncertainty, and doubt (FUD) arise or when profitable selling opportunities arise.
The Impact of Long-Term Holders on the Market
Despite the recent struggles in the Bitcoin market, LTHs have remained steadfast, with their supply continuing to increase. On the other hand, the supply of STHs has decreased. While this may not have an immediate impact on the market, the growing supply held by LTHs can have a bullish effect over longer periods due to supply-demand dynamics.
The Current State of BTC Price
As of now, Bitcoin is currently trading around the $25,700 mark, experiencing a 6% decrease over the past week.
Hot Take: The Power of Long-Term Holders
Bitcoin’s market is witnessing a growing divergence between long-term holders and short-term holders. This shift towards HODLing by LTHs could potentially have a bullish impact on the market in the long run. As an investor, it’s important to consider the strategies and behaviors of these different cohorts to make informed decisions in the crypto space.
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