A pattern in the supply of long-term Bitcoin holders could provide some clues as to when the next bull run could begin in earnest.
According to market intelligence platform On the Block, the supply of BTC HODLers is “an excellent indicator for measuring market cycles.”
HODLers” or long-term holders (LTH) refer to Bitcoin investors who have held their coins for at least a year without selling or transferring them on the blockchain.
LTHs are the decisive hands in the market, rarely selling their coins even when a profitable opportunity has presented itself or a deep price drop has occurred.
One way to track the behavior of these diamond hands is through the combined amount of balance they carry in their wallets.
Bitcoin HODLer Balance Has Followed a Specific Pattern in Previous Cycles
The supply of Bitcoin held by HODLers has shown some growth in recent years, suggesting that LTHs have been accumulating. This rise in the indicator has also continued during the latest rally, implying that LTHs are not yet ready to start taking profits. Something to keep in mind is that when the metric goes up, it does not mean that they are buying in the present.
Naturally, the indicator has a 1-year lag associated with it, as the coins must mature during that time before they can be included in the cohort. However, this only applies to purchasing, as holders who move their coins to sell instantly reset the age to zero and therefore remove them from the pool.
The analytics firm has highlighted a pattern that Bitcoin LTH supply has observed during the lead-up to past bull runs. It would appear that HODLers have shown accumulation in those periods. On the other hand, the beginning of sales of this cohort coincided with the beginning of the bullish rally itself.
So far, HODLers have only been accumulating recently, implying that the market may be in the pre-bull run phase. If the historical pattern holds for the current cycle as well, then HODLer bidding could be something to watch as a significant downtrend could become a sign that the bull run has begun once again.
BTC Price
Bitcoin had plummeted towards the $41,700 mark yesterday, but the asset has already seen a strong recovery as its price is now trading around the $43,000 level.
As positive sentiment waned over the past two weeks, BTC price has been trading within a tight range, facing strong resistance at $42,500. BTC, which was trading above $44,000 on December 10, has since recorded a 5% price drop, according to data from CoinMarketCap.
Trading firm QCP Capital, on the other hand, predicts that Bitcoin could retreat to around $36,000 before an uptrend resumes. At the same time, they expect Bitcoin to face overhead resistance between the $45,000 and $48,500 region. These projections are based on what they expect to happen if the Securities and Exchange Commission (SEC) approves Bitcoin spot ETFs in January.
QCP Capital does not expect Bitcoin to remain low for long as they are confident that Bitcoin’s recent resurgence will continue at some point. They estimate that this will probably happen after a few weeks, especially as traders prepare for a strong rally before the Bitcoin Halving, an event projected as the driver of the next bull run.
By Audy Castaneda
