Although the level of accumulation of bitcoin (BTC) in the hands of long-term holders (LTH) remains at high levels, the on-chain data reveals a transition of these towards a moderate phase of sales, according to a report by the analytical firm Glassnode.
“Bull markets can usually absorb many months of this distribution phase, but as sales continue, the possibility of a local or global cap increases,” the study notes. Until now, the preponderant attitude of LTHs had been to accumulate BTC and retain it, according to a previous report by Glassnode, reviewed by CryptoReportage.
The first indicator that Glassnode uses to show this stage of moderate sales is the concept of the “age” of the coins, or the period of time that they remain without movements. This is measured in days of currency destroyed (CDD). Each unit of BTC accumulates a “coin day” daily. For example, 0.5 BTC accumulates half a day of currency for each day that it remains without movement. Once they change hands, the currency days are destroyed.
In the following graph, it can be seen that the days of destroyed currency, proportional to the BTC sold, go from 10 million to 12.5 million in November, which shows BTC sales in that period. However, sales are well below what was sold in November of last year and in January of this year, in correspondence with notable increases in the price of bitcoin.
Bitcoin and liveliness
As coins are exchanged between hands and others are held, the days of coins created and days of destroyed coins increase simultaneously. The relationship between the days of coins destroyed and the days of coins created is defined in the report as liveliness. This metric tends to grow when there is more destruction of currency days and spending is imposed. On the other hand, when the liveliness decreases, the retention of the coins, or the hodling, is imposed.
Those trends are indicated in the graph below of bitcoin’s liveliness with green arrows (downward trend) when hodling predominates, and with red arrows, when spending is imposed.
It can be seen that after six months of hodling or diminishing vivacity, it flattens out and begins to change direction.
A different way to appreciate the same sales scenario by long-term holders is through the net change in position of long-term holders. In the Glassnode graph, published by analyst Will Clemente on November 12, a change in the position of LTHs was noticed, although the distribution or sale of BTC was just beginning.
In an analysis from the beginning of November, commented by this means, the analyst of the bitcoin market had warned that with the last historical maximum of the price of BTC, the high prices led to the taking of moderate profits, compared to those that occurred in other anterior stops. This week, the price of bitcoin started at $66,000 and has been trending down for the past three days. Its price at the time of writing this article is USD 59,876, according to CoinGecko.