Study Reveals Shift from Long-term Holders to Short-term Speculators
A recent report by Glassnode, an onchain analytics firm, suggests that the cryptocurrency market is recovering from the bear market as bitcoin investors transition from long-term holders to short-term speculators. The study examines the movement of coins between investors over time, tracking the flow from those who accumulated bitcoin during the bear market to those looking to profit from price swings.
Understanding Bitcoin Movement
Glassnode uses a metric called “realized capital” to measure the total amount historically paid to acquire all existing bitcoins. This provides insights into when coins were last moved between investors. The report also categorizes the bitcoin supply into different “age bands” to show the distribution of dormant coins held for various time periods.
Market Trends and Coin Distribution
According to the report, during market uptrends, older coins are spent and transferred from long-term holders to newer investors. Conversely, during market downtrends, speculators lose interest and gradually transfer coins to longer-term holders.
The report highlights that coins held for 1-2 years form a significant long-term holder cohort. Their holdings peak during bear market bottoms as conviction buyers accumulate. On the other hand, bitcoins held for less than a month represent short-term speculators. Their share of the bitcoin supply increases during bull markets as new money enters the market.
Current Market Structure
By comparing the holdings of each group, Glassnode’s models indicate where the market stands in its cycle. The current structure resembles the recovery phase after a major bear market bottom, similar to 2016 and 2019. Although bitcoin’s price has rebounded from lows, long-term holders still control over 80% of the supply.
The report concludes that the bitcoin supply remains dominated by long-term holders, with a majority of coins being older than 6 months.
Profitability of Holders
Glassnode also analyzes the profitability of short and long-term holders based on their average cost basis. This helps gauge whether there is a financial incentive to sell or hold at different price levels. The firm’s models suggest that the market may have entered an early bullish phase where long-term holders are in profit, while short-term traders are close to breaking even.
Hot Take: Bitcoin Market Recovery Signals Positive Momentum
New research from Glassnode shows that the cryptocurrency market is making strides towards recovery as long-term bitcoin holders transition to short-term speculators. By examining the movement of coins between investors, Glassnode’s report reveals that during market uptrends, older coins are transferred from long-term holders to newer investors. This shift suggests a resurgence in interest and confidence in the market. Additionally, the study indicates that while bitcoin’s price has rebounded, long-term holders still dominate the supply. This combination of factors points to a positive momentum for bitcoin and reinforces the notion that the crypto winter may finally be coming to an end.
Benito Cormi, the brilliant crypto analyst who has made waves in the world of cryptocurrency. With his razor-sharp analytical skills and deep understanding of the digital asset landscape, Benito has become a trusted figure in the industry and remains at the forefront, tirelessly researching and analyzing market trends to help individuals and businesses make informed decisions in this dynamic landscape.