Bullish markets can absorb many months of the distribution phase if sales continue, says Glassnode. The net change in the position of long-term holders allows seeing the beginning of the distribution or sale of BTC.
The accumulation level of Bitcoin (BTC) in the hands of long-term holders (LTH) remains at high levels. However, a report from Glassnode reveals a transition of these to a moderate sales phase.
The study notes that bullish markets can absorb many months of the distribution phase. However, the possibility of a local or global cap increases if sales continue. A previous report from the analytical firm indicates that long-term holders had accumulated BTC predominantly.
The age of the coins, or the period that they remain immobile, is the first indicator that Glassnode uses to show that phase of moderate sales. Each unit of BTC accumulates one coin day daily as long as it does not change hands. In other words, when a holder moves it, the coin days experience their destruction.
A chart from Glassnode indicates that coin days destroyed, proportional to the BTC sold, went from 10 million to 12.5 million in November. That is evidence of the BTC sales during that period. However, there was a much higher sales volume in November of last year and January of this year. Of course, they were in line with significant increases in the price of Bitcoin.
Relationship between Selling and Holding Bitcoin
While some coins change ownership and others remain on hold, the days of coins created and those destroyed simultaneously increase. The report defines the relationship between these two situations as liveliness, a metric that tends to grow when there is more destruction of coin days. On the contrary, when liveliness decreases, the holding (hodling) of the coins prevails.
On a Glassnode Bitcoin liveliness chart, the green arrows show a downward trend when hodling predominates. On the other hand, red arrows indicate that there is an upward trend when spending prevails.
The graph reveals that the decreasing hodling or liveliness flattens out and begins to reverse after six months.
The net change in the position of long-term holders also allows appreciating their sales scenario. The graph published by analyst Will Clemente shows the transition when the distribution or sale of BTC is just beginning.
After the last all-time high that Bitcoin reached, high prices led to moderate profit-taking contrary to previous caps. The value of the cryptocurrency started at USD 66,000 and has shown a downward trend in the past few days.
Bitcoin is trading at around USD 58,000 and has accumulated a loss of 11.4% in the last 24 hours. Its daily trading volume is more than USD 40 billion, and its capitalization is about USD 1.09 trillion, according to CoinGecko.
Despite its recent drop, the pioneering cryptocurrency has proved it can resume and even exceed its all-time highs. For example, it reached two ATHs on two consecutive days in recent weeks. Therefore, it is just a matter of time before Bitcoin hits new record prices.
By Alexander Salazar
