On-chain data shows that long-term holders of Bitcoin have recently entered a phase of distribution. Here’s what this could mean for the price of BTC.
Bitcoin long-term holders just sold more than 177,000 tokens
As noted by CryptoQuant community analyst Maartunn in a new one after on X, old coins have recently undergone a negative balance change. Below is the chart from market intelligence platform IntoTheBlock, cited by the analyst, showing the balance changes for different holder groups on the Bitcoin network.
The groups here are divided based on holding time: investors who purchased their coins within the last month fall into the <1 month cohort (colored yellow), while those who purchased between one and twelve months ago fall into the 1- 12 are posted. Month group (pink).
In the context of the current topic, neither is important; the relevant cohort is the third (blue), which includes investors who have held for more than twelve months.
Statistically, the longer an investor holds onto their coins, the less likely they are to sell them at any time. So the 12+ month cohort would include the most determined people on the network.
The graph shows that these HODLers were busy accumulating during the Bear market 2022 and the 2023 recovery rally, but the trend has seen a shift in 2024.
During the first quarter of the year, this Bitcoin cohort’s balance sheet turned significantly red, implying that long-term holders were reaping the rewards of their patience.
These diamond hands eventually saw their selling pressure dry up as cryptocurrency consolidation followed the new one all-time high (ATH) extended until eventually their change in equilibrium reached a completely neutral level.
Recently, as bullish waves have returned for Bitcoin, the balance change for the group has turned red again, implying that these HODLers have started selling again.
As for what this could mean for the cryptocurrency, perhaps a historical pattern could shed some light. “Long-Term Holder activity often acts as a contrarian indicator,” says Maartunn. “LTHs tend to buy (increase ownership) during price declines and sell (decrease ownership) during price increases.”
However, the chart shows that even though the LTHs are timing their sales with bull runs, the actual value of the sales is increasing top of the cryptocurrency only takes place after its distribution has taken place over an extended period of time. This could potentially mean that there is room for BTC to continue in the current rally before a ceiling is reached.
Something that could debunk this pattern, however, is the fact that the volume of LTH sales has been less intense this cycle, as IntoTheBlock pointed out in an after.
“While long-term holders are selling, it is less aggressive than during previous bull peaks,” the analytics firm notes. So it is possible that the current Bitcoin cycle will bring about new dynamics in the market.
BTC price
At the time of writing, Bitcoin is trading around $68,800, down more than 3% in the past week.