Bitcoin (BTC) is in a “transition” that should pave the way to the next peak of the bull marketaccording to a new study.
In the latest issue of his weekly newsletter, “The Week On-Chain“, analytics firm Glassnode unveiled its latest tool to track Bitcoin’s resurgence.
Bitcoin hodlers in “transition”
After the bear market of 2022 and the signs of recovery in the first quarter of this year, On-chain metrics have undergone a broad transformation, with many suggesting that a long-term BTC price bottom has already been reached.
However, with prices stagnating since mid-March, doubts have returned, along with downside targets stretching as far as $20,000.
For Glassnode analysts, however, Bitcoin’s long-term investor base is already preparing for better times.
Using existing on-chain tools, analysts have unveiled a new way to track sentiment among long-term (LTH) holders, those who have accumulated BTC for at least 155 days.
The tool, “Long Term Holder Spending & Profitability”, divides LTH behavior patterns into four phases.
After a period of “capitulation” at the end of 2022, LTH has begun a “transition” towards a state of “equilibrium” before the full “euphoria” arrives, the next high of the BTC price cycle.
Capitulation is defined as a situation where “the spot price is below the LTH cost basis,” Glassnode explains, with significant LTH spend therefore “probably due to financial pressure and capitulation.”
Transition, for its part, is when the “Market trades slightly above the cost base of long-term holders, and the occasional light expense is part of daily trading.”
The LTH cost base, as of May 30, is around USD 20,800, according to separate data.
“Our current market has recently reached the transition phase, which points to a local pickup in LTH spending this week,” comments “The Week On-Chain”.
“Depending on the direction in which volatility emerges next, we can use this tool to pinpoint local periods of overheating conditions, as seen through the lens of long-term holders.”
“Seeking balance”, but for how long?
Complementing LTH, Bitcoin’s short-term holder (STH) cohort, which corresponds to more speculative investors, is already on the radar.
Speculative activity is up in 2023, Glassnode previously claimed, making its cost base – around $26,000 – an increasingly important level.
“The digital asset market continues to outperform major commodities in 2023, however all are currently experiencing a significant correction. Having recovered from the depths of the 2022 bear market, investors in Bitcoin are in equilibrium shape, with little gravity in any direction,” summarizes the bulletin.
“Given the extremely low volatility and tight trading ranges of late, it looks like this balance will soon be upset.”
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