During the peaks of the market cycle, long-term holders distribute all of their tokens to short-term holders. If those buying Bitcoin in November stayed, they would gradually end the hoarding phase and begin the next bullish market.
Bitcoin (BTC) on-chain indicators relating to the lifetime of current holders allow determining similarities with previous market cycles.
It is possible to know the amount of circulating Bitcoin moving in a specific period through the HODL Wave indicator. It introduces a slight adjustment, using the realized price instead of the market price, to provide more accurate data.
If the one-to-two-year HODL Wave band is 15% wide, 15% of the circulating BTC has moved between one and two years.
The bands between one day and one month widen considerably during the peaks of a market cycle. That happens because long-term holders have distributed all their coins to short-term holders.
Despite occurring at 2013, 2017, and 2021 market cycle highs, this was not as pronounced as those of May or November 2021.
Short-Term Holders Only Hold 9% of the Circulating Bitcoin
Following the all-time high in November, the most relevant development is the rise in the one-to-two-year bands. That has occurred due to the decrease in the shorter-term bands between one week and 12 months.
The range of one to two years has increased considerably since November, while the short-term bands have decreased significantly.
By removing bands under one month old, the percentage of 91% is in line with the lows of previous market cycles. In other words, short-term holders only hold 9% of the circulating tokens.
Past Market Cycles Allow Predicting the Future of the Bitcoin Price
The one-to-two-year band has historically been nearly 35% when the price has reached the absolute minimum. While the band was at 33% when it bottomed out in 2015, it peaked at 48% after being at 30% in 2018.
Since the band is currently at 37% and keeps increasing, the price may be in a hoarding phase after reaching the bottom.
At the end of the hoarding phase, the one-to-two-year band decreases again. Meanwhile, the two-to-three-year range begins to increase.
If those investors stayed after the increase since November, they would gradually move into the two-to-three-year within four months.
If that happens, it might indicate the end of the hoarding phase and the beginning of the next bullish market. Many traders would be happy with that event since they would have the opportunity to make profits.
Bitcoin is increasingly relevant in the economic system, which analysts have reiterated on several occasions. Since the crypto asset has historically proved able to recover from the worst crises, this would be an opportunity to do it again.
Bitcoin is trading at around USD 22,978 and has accumulated a 2.8% loss over the last week. While its daily trading volume is above USD 13.62 billion, its market capitalization is about USD 439.23 billion, according to CoinGecko.
By Alexander Salazar
