Cryptocurrency

Long-term Bitcoin holders stubbornly hold on despite 33% holding losses

Hull Invest

Bitcoin fell to $15,500 on November 21, the lowest price in 106 weeks for a major cryptocurrency.

Market sentiment remains fragile as anger over the FTX debacle turns to acceptance and the scale of what happened finally sinks in. Worse, the full extent of the black hole is unknown at this time.

In the wake of FTX, several crypto exchanges have scrambled to prove solvency, but contagion risk continues to loom large.

of Cryptosphere & Greed Index Currently reads 22 โ€“ Extreme Fear. Oddly enough, this compared relatively favorably to his June Terra implosion, which saw a reading of 6 at the peak of fear.

On-chain Glassnode data analyzed by CryptoSlate reveals that long-term holders (LTH) continue to accumulate despite fears of contagion.

Bitcoin: total supply held by long-term holders

Total Supply Held by Long-Term Holders (TSHLTH) refers to BTC held for 6 months or longer. Tokens that reach this time threshold are generally considered dormant and are unlikely to be used.

By contrast, Short-Term Holders (STH) generally refer to new investors with “weak hands” who are more likely to exit the market during periods of price volatility.

The chart below shows the LTH accumulated during price suppression while selling during a bull market. TSHLTH is currently at 13.8 million BTC, the highest ever. This represents approximately 72% of the circulating supply.

Bitcoin: total supply held by long-term holders
Source: Glassnode.com

Total loss supply held by long-term holders

LTH is considered smart money in that it tends to follow logic and reason rather than emotion.

The chart below shows that about 6 million coins held by LTH are lost. This pattern coincides with the bear market troughs of 2015, 2019 and 2020, the highest ever.

Total loss supply held by long-term holders
Source: Glassnode.com

Long-term position Net increase/decrease position

Net Change Position (NCP) refers to the net amount of Bitcoin entering and leaving an exchange wallet.

The chart below shows that LTH is currently accumulating at its highest rate net in 2022. H1 saw NCP flip between accumulation and distribution, whereas H2 is characterized primarily by net accumulation. The trend is interpreted as bullish, with LTH continuing to maintain confidence and willingness to buy even in frightening market conditions.

Long-term holder net position change
Source: Glassnode.com

supply at profit and loss

Analyzing LTH’s P/L, we can see that 50% of LTH are profitable at the current price and 33% are loss.

Compared to previous bear markets, this counts as one of the biggest differences, making the 2015 bear market a worthy candidate.

Long-term holder supply in profit and loss
Source: Glassnode.com

A new cycle of trend reversal usually follows a yield. However, the above data shows that LTH has not yet lost hope and surrendered at its current price.

Posted In: Bitcoin, Research

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