Bitcoin enthusiasts and investors often seek to understand the intricate patterns and cycles that this leading cryptocurrency undergoes. Recent on-chain data suggests that Bitcoin might be tracing a path similar to a previous cycle, offering intriguing insights into its future movements.
Bitcoin’s Journey: Entering Phase 2 of the Bull Run
In a detailed CryptoQuant Quicktake post, an analyst has highlighted a trend in the Bitcoin long-term holder (LTH) supply that mirrors observations from the 2017 cycle. To understand this, we must first look at the two main groups in the Bitcoin userbase: long-term holders (LTHs) and short-term holders (STHs). These classifications are based on the duration of holding, with a cutoff at 155 days. Investors retaining their coins beyond this time frame are considered LTHs, while those within this window are STHs.
Statistical analyses suggest that the longer an investor holds their Bitcoin, the less inclined they are to sell, thus marking LTHs as more steadfast participants in the market. Below, we delve into the trends influencing the supply held by these Bitcoin cohorts.
Understanding the Supply Dynamics
The accompanying chart illustrates the trends in the combined supply held by Bitcoin’s long-term and short-term holders. Notably, during the rally in the first quarter of the year, there was a significant decline in the LTH supply, indicating that even the most resolute investors were tempted to capitalize on their gains. As LTHs transferred their tokens, the STH supply naturally increased, with these coins now classified under the STH category.
However, a reversal occurred with the LTH supply, as it bounced back from its earlier decline. Yet, the arrival of a new all-time high (ATH) prompted another shift in direction. The analyst further notes a pattern akin to the 2017 cycle: an initial phase of distribution by LTHs was succeeded by accumulation, paving the way for a second distribution phase.
Is a New Phase of Distribution on the Horizon?
This recent shift in LTH supply could signify the commencement of the phase 2 distribution in the current cycle, where new capital enters the market, taking coins from the hands of seasoned HODLers. However, the LTH supply isn’t the only metric echoing past trends. The Bitcoin Binary Coin Days Destroyed (CDD) metric also exhibits a fascinating pattern.
The Binary CDD reveals whether HODLers are selling more or less than the historical norm. The graph indicates that the 152-day moving average (MA) of this metric is potentially experiencing a second breakout, reminiscent of the surge leading into the 2021 bull run.
Current BTC Price and Market Exploration
As Bitcoin embarks on its ATH exploration mode, its price is hovering around $75,900. Investors remain keenly observant, eager to see how these patterns will influence the cryptocurrency’s trajectory in the coming months.
In conclusion, Bitcoin’s current cycle exhibits fascinating parallels with previous cycles, offering valuable insights for market participants. By analyzing these trends, investors can strategically position themselves to anticipate and capitalize on future market movements.
