Bit continues to trade above the critical price level of $100K, supported by stable capital flows. Long-term holders are taking advantage of this abundant liquidity to distribute the supply.
Bitcoin: Short-Term Holder Percent Supply in Profit
In the deep drawdown profile mentioned above, the drops in August 2023 and September 2024 were the two deepest declines in the current bull cycle. Both of these periods can be considered points of extreme market pressure, with significant potential to transition into an accelerated state of fear and realized losses.
We can visualize this through metrics related to Short-Term Holder (STH) wallets, which we often view as representative of new market demand. As discussed in previous research on Seller Exhaustion, STH wallets are the primary source of realized losses during bull runs, providing us insight into the degree of profit concentration at the top of the market.
Typically, periods of extreme market stress are characterized by the majority of the coin supply falling into a state of loss (coins being in loss). We can see that in both of these instances (August 2023 and September 2024), a significant majority of the coins held by the STH group were indeed in an unrealized loss state.
Bitcoin: Short-Term Holder Supply in Loss vs Loss Realized
A similar story is observed when we quantify the STH losses as a percentage of their total investment basis (divided by STH Realized Cap). The periods mentioned earlier did not lead to consecutive realized losses, even though the entire STH supply had fallen into an unrealized loss state.
In the chart below, we highlight (in green) the time frames where both the percentage of the short-term supply in loss and the degree of realized losses have moved more than 1 standard deviation above the medium. The unwinding of the yen carry trade on August 5th is the only notable instance where this condition was briefly flagged throughout the bull market uptrend.
Bitcoin: Long/Short-Term Holder Supply Ratio Percent Change
In the previous section, we evaluated and analyzed the relatively impressive strength of the Bitcoin market, even during corrective periods. Next, we will shift our focus to the demand profile, a factor that is offsetting the selling pressure from current holders who are taking profits.
Long-Term Holders (LTHs) have distributed a significant supply volume during the price run-up to and beyond the $100k level. The selling pressure from the LTH group has exceeded what was seen in March, when the market set a new ATH at $73k.
The scale of this selling pressure is quite large, but this is consistent with the typical market dynamics observed in the later stages of a Bitcoin bull cycle.
Bitcoin: Realized Cap HODL Waves
Complementing the observation above, we can see that the ratio of assets recently moved has started to increase significantly in the past few months. This occurs as coins distributed by the LTH group are transferred to new investors, thereby highlighting the increase in new demand activity.
However, the ratio of assets held by new investors has not yet reached the peak levels seen in previous price cycle tops. This suggests the market may not have reached the level of exuberance and saturation by speculative investors as observed in prior cycles.
Bitcoin: Spent Volume by Age
After illustrating the scale of selling pressure from the LTH group, we can increase the granularity of the assessment by utilizing the age-cohort subsets of this group.
When analyzing the spent volume of coins older than 6 months, it appears that the majority of the selling pressure originates from the 6-12 month cohort. These coins were largely acquired in 2024. Notably, coins with a lifespan of 3 years or more have remained relatively stable, potentially demanding higher prices before their holders decide to sell.
Summary
Supply-side forces are becoming increasingly prominent as LTHs continue to distribute coins in large volumes. However, a strong demand force is also clearly evident, largely offsetting the significant selling pressure from current holders.
Additionally, the ratio of Bitcoin held by new investors has increased significantly, reinforcing the view of a robust demand profile. However, this also indicates a shift in asset allocation away from long-term investors, a dynamic typically observed in the late stages of Bull Markets.
What do you all think the market will be like going forward? I'll see you all on the Onchain issue 52/2024 on the Coinmoi website to see how the indicators have been moving during this time.
The article Bitcoin Onchain Week 51/2024: Resilience first appeared on CoinMoi.
