On-chain data shows that Bitcoin may currently be following a similar pattern to the previous cycle in terms of this metric.
Bitcoin may now enter the second phase of its bull run
In an article on CryptoQuant Quicktake, an analyst noted that recent trends in Bitcoin’s supply from long-term holders are reminiscent of what was observed during the 2017 cycle.
Long-term holders (LTH) are one of the two main parts of the BTC user base divided by holding time, the other part is called short-term holders (STH).
The cutoff between the two groups is 155 days, and investors who bought within this window are part of STH, while those who have held beyond that window since then are part of LTH.
Statistically, the longer investors hold onto their tokens, the less likely they are to sell them at any point, and therefore LTH is considered to include more committed market participants.
The chart below shows the trend in the total supply held by participants in various Bitcoin groups.
As can be seen from the chart, Bitcoin LTH supply has dropped sharply during the rise in the first quarter of this year, indicating that even these diamond hands cannot resist the temptation of profit-taking.
As LTH supply decreases, STH supply naturally increases because every time LTH transfers its tokens on the blockchain, they become part of the STH queue.
LTH supply recently reversed its downward trend from earlier this year, but with the recent rally to new all-time highs (ATHs), the indicator has changed direction again.
In the chart, the quant highlighted that a similar pattern played out during the 2017 cycle; LTH’s first phase of distribution was followed by accumulation, which then led to a second phase of distribution.
The latest shift in LTH supply could be the start of the second phase of distribution in the current cycle, with new capital flowing in, taking tokens away from HODLers.
As the chart shared by the analyst shows, LTH supply is not the only indicator showing a trend in line with the previous cycle, Bitcoin Binary CDD is also forming an interesting pattern.
Binary Coin Destruction Days (CDD) essentially tells us whether holders are selling below or above their historical averages, and it’s clear from the chart that the metric’s 152-day moving average (MA) could be showing signs of a second breakout similar to the one that led to the 2021 bull run.
Bitcoin Price
Bitcoin continues to be in ATH exploration mode with its price around $75,900.
