Data from the market intelligence platform IntoTheBlock has revealed that the balance of Bitcoin HODLers has experienced a significant drop of approximately 9.8% during the current bull run. This trend indicates that long-term holders (LTHs), who have held onto their BTC for at least one year without selling or transferring them, have been gradually reducing their total balance.
The concept of LTHs and short-term holders (STHs) plays a crucial role in understanding the dynamics of the Bitcoin market. LTHs are considered to be committed entities who are less likely to sell their tokens, while STHs are characterized by weaker hands and are more prone to selling in response to market fluctuations.
The data presented by IntoTheBlock shows a clear downward trend in the combined holdings of Bitcoin LTHs over the past decade. Specifically, the total balance of these HODLers has decreased by nearly 10% during the current downtrend. This decline in supply suggests that LTHs are breaking their dormancy and participating in selling activities.
It is important to note that while selling can have an immediate impact on the indicator, buying behavior among LTHs has a 1-year delay. This means that coins can only be considered part of the LTH cohort after being held for at least a year. Despite their commitment to holding, LTHs may be compelled to sell when significant profits are realized during a major Bitcoin bull run.
Comparing the current cycle to previous bull markets, IntoTheBlock highlights that the decline in long-term holder balances has been less pronounced this time around. In 2021, the balance dropped by 15%, and in 2017, it decreased by 26%. This suggests that there may still be room for further distribution among HODLers before the Bitcoin rally reaches its peak.
In addition to the insights provided by IntoTheBlock, CryptoQuant community analyst Maartunn has pointed out that the total Open Interest for the cryptocurrency sector has reached a new all-time high of $79.2 billion. This metric, which measures the number of derivatives positions opened on centralized exchanges, typically corresponds to increased market volatility.
Despite these developments, the price of Bitcoin has been consolidating around the $95,800 mark in recent days, signaling a period of relative stability in the market. As investors continue to monitor the behavior of HODLers and other market indicators, the future trajectory of Bitcoin remains uncertain but full of potential for further growth and volatility.