Blockchain analytics firm Glassnode is weighing in on the supply dynamics of Bitcoin and how long-term holders are reacting to the most recent crypto correction.
In its latest newsletter, Glassnode highlights that hundreds of thousands of BTC have moved hands in the last 30 days as the flagship cryptocurrency lost around 50% of its value from the all-time high of $64,000.
“Over the last month, a total volume of 160,700 BTC has been spent from an illiquid state back into liquid circulation. This provides a gauge of the amount of overhead supply that has re-entered the market after being classified as illiquid by our analytics and heuristics.”
While a huge supply of BTC has entered the market, Glassnode says it represents only a small amount of the Bitcoin that was accumulated since the coronavirus-induced sell-off in March of last year.
“What is important to note is that this 160,700 BTC represents just 22% of the supply that moved the other direction, from liquid to illiquid, since March 2020. This means that of the 744,000 BTC that were withdrawn to cold storage (or equivalent) over the last 14 months, 78% of them have remained unspent despite this recent volatility.”
Despite the influx of Bitcoin into the market, the crypto insights platform notes that long-term holders are beginning to buy back after selling some of their BTC in the first five months of 2021.
“The supply held by long-term holders (LTHs) has started to accelerate upwards… After a period of LTHs distributing coins, as the market rallied from $10,000 to the $64,000 all-time high, the net change in LTH supply is now in a firm uptrend (HODLing behavior).”
Glassnode also points out that the shift in behavior of long-term holders is reminiscent of their activity during the previous bear market.
“Yet again, we can see this fractal is similar to the late 2017 bull and early 2018 bear. This fractal describes the inflection point where LTHs stop spending, start re-accumulating and hodling what are now considered cheap coins.”
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