The famous cryptoanalyst @raizteracional shared on Twitter a graph of the supply of bitcoin held by LTH against the total supply available. The analyst pointed out that the current percentage of long-term supply stands at 73.5% and is close to its all-time high since 2015.

Bitcoin is getting more and more rare. In fact, the current level of BTC supply held by long-time hodlers is nearing its all-time high set in 2015. On-chain data shows us that investors are withdrawing their coins at a record pace and moving them into cold wallets.

Historically, this type of situation has been observed at the bottom of macrocycles in the cryptocurrency market. Therefore, the large amount of BTC supply in the hands of long-term (LTH) holders and the upcoming crypto asset halving event could be the catalysts for a new bull market.

BTC Supply and Asset Price

Bitcoin supply is determined by a mathematical algorithm that limits BTC withdrawal to a maximum of 21 million units. New BTC is then awarded to miners who manage to solve a mathematical task to validate the next block in the network chain.

However, the supply of bitcoins increases at a decreasing rate, which is regulated by what is called a “halving”. About every four years, the reward given to BTC miners is literally cut in half. Therefore, fewer and fewer newly mined coins make it to the market.

As a result of this situation and the principle of supply and demand, the price of the largest cryptocurrency in the sector gradually increases (black curve). In short, the limited supply of the asset and the decreasing issuance of new coins contribute to increasing the scarcity of Bitcoin.

Such scarcity, combined with the elements of cryptographic security, durability, and transparency, to name just the most important strengths of the Bitcoin network, raises the price that investors are willing to pay for this digital asset.

Hodlers Offer

Bitcoin long-term (LTH) holders are sometimes called “hodlers” because they follow a simple investment strategy called “HODL” (Holding On for Dear Life). Short-term holders (STHs), in contrast, hold their coins for less than 155 days, after which they transfer them to another address or sell them.

The supply held by LTH has been rising steadily and, at least since August 2022, has consistently recorded new all-time highs (ATH). Current data suggests that 14.532 million BTC is held for the long term. Naturally, these data also partially take into account missing parts.

On the other hand, the inverse correlation is not so clear. In fact, the macroeconomic low in the BTC price has not always been the same as the peak in long-term headline supply.

A Return to the Top of 2015

The last sharp drop in the supply of bitcoins held by LTH was seen between October 2020 and April 2021. This was when the BTC price broke out of the $11,000 zone before finally recording an all-time ATH of $64,500.

Interestingly, neither the 2018 bear market, nor the 2020 COVID-19 crash, nor even the 2022 downtrend resulted in as large a retained supply of LTH as we are seeing now. According to analyst @raizteracional, this indicates that BTC is becoming rarer.

Furthermore, it indicates the great confidence of investors in the industry’s first digital asset. On the other hand, when a new wave of short-term holders wants to acquire BTC, hodlers will reduce their holdings. The Bitcoin price will then be in its expansion phase ahead of its future bull market.

By Marina Meza


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