On-chain data shows the Bitcoin long-term and short-term holder ratio is forming a pattern that has often led to bear market transitions.
Bitcoin Long/Short-Term Holder Supply Ratio Has Spiked Recently
According to the latest weekly report from Glassnode, the Long/Short-Term Holder Supply Ratio has observed a sharp rise recently. The “Short-Term Holders” (STHs) and the “Long-Term Holders” (LTHs) are the two main divisions of the Bitcoin userbase based on holding time.
The investors who bought their coins within the past 155 days are classified under the former group, while those who have held onto their coins for longer than this period fall into the latter.
Statistically, the longer an investor holds onto their coins, the less likely they become to sell them at any point. As such, the LTHs represent the more stubborn side of the market than the STHs.
Despite their strength, the rally that the cryptocurrency’s price saw towards the new all-time high (ATH) earlier in the year was still enough to entice even the diamond hands into selling.
One way to track the behavior of these cohorts is through the combined amount of Bitcoin supply their members are carrying in their wallet balances.
The chart below shows the trend in the ratio between this supply for the LTHs and the STHs over the past decade.
Looks like the value of the metric has been on the up in recent days | Source: Glassnode's The Week Onchain - Week 36, 2024
As displayed in the above graph, the Bitcoin Long/Short-Term Holder Supply Ratio had seen a sharp decline earlier in the year, representing the phase where the LTHs sold coins to new hands coming into the market during the rally.
While this showed that the resolve of these HODLers had wavered, the trend is not something new that has occurred in this cycle. The chart shows that the ratio had also seen a similar decline during the 2017 and 2021 bull runs.
Recently, as BTC’s consolidation has lengthened, the indicator has shown a rebound, suggesting the supply share of the LTHs has resumed an upward trajectory.
Something to note is that this increase doesn’t suggest that the LTHs are “buying” supply off the hands of the STHs. Rather, as the only way for coins to get classed under this cohort is by aging beyond the 155-day mark, the rise in the ratio implies some STHs have been maturing into the cohort.
This means that HODLing conviction is returning to the market. This may not entirely be positive; however, as the report notes, “historical examples of LTH supply increasing like this show that this usually occurs during the transition towards a bear market.”
Of course, the keyword here is “usually,” as there have also been some outliers. It now remains to be seen which way Bitcoin will go now given this pattern in the Long/Short-Term Holder Supply Ratio.
BTC Price
Bitcoin has been gradually moving in a bearish trajectory recently, trading around $56,700.
The price of the coin has been going down over the last few days | Source: BTCUSD on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
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