Recent on-chain data shows that a relevant class of Bitcoin investors, known as long-term holders, have continued to exit their market positions.
LTHs are actively switching to distribution
In a November 1 post on social media platform X, popular on-chain analyst Burak Kesmeci said shared an insight into the prevailing structural bias among Bitcoin’s long-term holders. Kesmeci’s analysis is based on the Long-Term Holder Net Position Change metric, which tracks the net buying or selling behavior of Bitcoin’s long-term investors over a 30-day period.
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A positive reading is typically interpreted as a sign that LTHs are in a net accumulation phase, as within this investor class there are more market participants buying Bitcoin than those selling. On the other hand, if the Long Term Holder Net Position Change is negative, it means that the LTHs are in a distribution phase.
Kesmeci explained in his post that there is increasing momentum toward the sell side of the metric. In the highlighted chart, it appears that approximately 400,000 BTC have been sold in the last 30 days. Interestingly, LTHs do not appear to be reducing their sales – a behavior that is equally a concern.
In the event that Bitcoin’s long-term investors refrain from selling their holdings, Bitcoin could establish a local price bottom, as this typically signals renewed interest and smart money positioning for the next cycle. However, if this distribution momentum continues to grow, the leading cryptocurrency could continue to move lower as its long-term holders continue to apply more bearish pressure.
LTH 2.2% supply decline relatively modest – Analyst
In another X-post, crypto expert Darkfost says shed light on the implications of Bitcoin’s LTH behavior change. According to the analyst, the “modest reduction” in Bitcoin LTH supply by 2.2% in October is not much to worry about, especially when compared to 2024 levels.
As of March 2024, Bitcoin LTH supply fell by approximately 5.05%. In December there was an even bigger drop of around 5.2%. Darkfost suggested that the current breakdown the market is seeing could therefore be the result of early profit taking, with the market soon seeing a recovery in the Bitcoin price.
Nevertheless, the trend of the long-term holders’ net position is one to watch, as a return to neutral values could signal the start of an accumulation phase and subsequent price reversal to the upside.
At the time of writing, BTC is valued at around $110,750, with no significant movements in the last 24 hours.