Many metrics can be used to determine the top and bottom of the cycle, but the realized cap HOLD wave is rarely mentioned in bundles.
This metric, also known as the HODL Wave, represents a bundle of all active supply age zones. In the graph below, each colored band shows the percentage of all circular Bitcoins that were last moved within a particular time frame, weighted by realized price.
Data from Glassnode It shows that 80% of the circular supply of Bitcoin is in the hands of long-term holders (LTH). LTH is defined as a user who has owned Bitcoin for more than 6 months and is usually a user who strongly supports the bottom of the Bitcoin market cycle.
LTH is considered “smart money” in the Bitcoin market and is usually seen accumulating Bitcoin in a restrained market. When the bull market begins, LTH distributes accumulated Bitcoin and makes up the majority of its profits.
On-chain data strongly supports this theory. The chart above clearly shows that LTH sold off its holdings every time Bitcoin claimed the highest ever (ATH). At the bottom of every cycle, LTH is a last resort hodler and provides strong support for Bitcoin.
An analysis of long-term and short-term holder supply in Glassnode’s profit and loss further supports this claim.
The graph below shows that 80% of Bitcoin’s supply is in the hands of LTH marked in blue. The remaining 20% of the supply is held by short-term holders (STH) and is marked in red. Overlapping the blue and red zones of the chart with Bitcoin price volatility shows that LTH saw little surrender in this market cycle — their holdings fell from 82% to 80% of supply. rice field.
The 2% decline is significantly lower than what we saw in the previous cycle, indicating that the market is hitting a low price. LTH seems to strengthen their belief in the value of Bitcoin as these low highs strengthen the strength of the network. In the bear market, which began in May, a small portion of Bitcoin’s supply has moved from LTH to STH. This is because LTH saw it as an opportunity to accumulate or continue to accumulate Bitcoin.
The ongoing bear market looks creepy at the bottom of all previous market cycles, but it’s still too early to know if the industry is heading in a more bullish direction. However, if Bitcoin reaches the bottom of this cycle, we can expect a recovery in the coming weeks.
