Bitcoin Long-Term Holders Distribute Assets, Signaling Potential Bullish Trends, Say Analysts
In traditional markets, when long-term investors begin selling their holdings, it often indicates a possible market downturn. However, the narrative in the cryptocurrency space is quite different. Analysts are viewing the distribution of Bitcoin by long-term holders—those holding coins for over five months—as a bullish sign for the market.
Markus Thielen, founder of 10x Research, observed that significant declines in long-term holder supply have historically been followed by strong Bitcoin rallies, citing Q1 and Q4 of 2024 as prime examples. As long as long-term holders continue to reduce their Bitcoin holdings, analysts predict a potential short squeeze could drive prices higher.
According to Glassnode, the supply held by long-term investors has dropped to approximately 13 million BTC, with over 1 million BTC changing hands as Bitcoin surged above $100,000. This shift from long-term holders to short-term traders indicates an influx of demand at higher prices, reinforcing the notion of a bullish market sentiment.
While long-term holders continue to sell, the pace has slowed in recent weeks. Glassnode’s data shows that the rate of change in the long-term to short-term holder supply ratio has eased, suggesting a more measured approach to distribution by long-term holders.
Decreasing Exchange Reserves Could Signal Supply Constraints, Analysts Suggest
Bitcoin stored in centralized exchanges has dropped to 2.7 million BTC from over 3 million BTC six months ago, Glassnode reports. This outflow is often viewed as a positive signal, indicating that coins are being taken off the market, reducing short-term availability and potentially creating upward pressure on prices.
However, analysts note that much of this decline is attributable to Bitcoin being moved into exchange-traded funds (ETFs), particularly those managed by custodians like Coinbase. These ETFs allow Bitcoin to be traded just as easily as actual coins, meaning the supply reduction on exchanges may not necessarily indicate a true supply shock.
After accounting for Bitcoin moved into ETFs, Glassnode estimates that over 3 million BTC are now in these alternative vehicles. This shift suggests that while Bitcoin’s availability on exchanges has decreased, demand for Bitcoin remains robust and accessible through ETFs, which still points to a healthy outlook for the asset.
