A pattern in the supply of long-term Bitcoin holders could provide some clues as to when the next bull run could begin in earnest.
Bitcoin HODLer balance has followed a specific pattern in previous cycles
According to the market information platform InTheBlokthe BTC HODLers offering is “an excellent indicator for measuring market cycles.” The ‘HODLers’ or long-term holders (LTHs) refer to the Bitcoin investors who have held their coins since at least a year ago without selling or transferring them on the blockchain.
The LTHs are the determined hands of the market, rarely selling their coins even when a profitable opportunity has presented itself or a deep price crash has occurred.
One way to track the behavior of these diamond hands is by the combined amount of balance they have in their wallets. The chart below shows this Bitcoin metric trend over the past few years.
The value of the metric seems to have been steadily going up in recent months | Source: IntoTheBlock on X
As shown in the chart above, HODLers’ Bitcoin supply has shown some growth in recent years, indicating that LTHs have been accumulating.
This increase in the indicator has also continued during the last rally, implying that LTHs are not yet ready to start taking their profits. Something to note is that when the benchmark goes up, it doesn’t mean buying in the present.
The indicator obviously has a one-year lag associated with it because coins have to mature for that long before they can be included in the cohort. However, this only applies to buying, as holders who move their coins to sell immediately reset their age to zero and therefore remove them from the group.
In the chart, the analytics firm has highlighted a pattern that Bitcoin LTH supply has observed during the run-up to previous bull runs. It appears that the HODLers have shown accumulation during such periods.
On the other hand, the start of this cohort’s selling coincided with the start of the actual bull rally. So far, HODLers have only recently started to increase, implying that the market may be in its pre-bull run phase.
If the historical pattern indeed holds true for the current cycle, then the HODLer offering could be something to keep an eye on, as a significant downtrend in it could prove to be a signal that the bull run has restarted.
BTC price
Bitcoin had fallen towards $41,700 yesterday, but the value has already seen a sharp recovery as the price is now trading around the $43,000 level.
Looks like BTC has jumped up during the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, IntoTheBlock.com
Disclaimer: The article is for educational purposes only. It does not represent NewsBTC’s views on buying, selling or holding investments and of course investing involves risks. You are advised to conduct your own research before making any investment decisions. Use the information on this website entirely at your own risk.