CryptoQuant has identified a significant decline in the supply of Bitcoin held by short-term holders (STH), which may hinder the cryptocurrency's price growth. The firm reports that the 30-day change in STH supply has reached its lowest point since 2012, indicating a substantial shift in market dynamics. This trend shows that Bitcoin is increasingly being accumulated by long-term holders (LTH), who typically retain their assets for 155 days or more.

Market Dynamics

The movement of Bitcoin supply towards LTHs suggests a growing confidence in the cryptocurrency's long-term value. However, the decreasing activity from STHs could be limiting price momentum. Julio Moreno, Director of Research at CryptoQuant, emphasized that while an increase in LTHs is often a precursor to future price increases, active participation from STHs is essential for sustaining a price rally. Historically, Bitcoin prices tend to rise when new holders buy from long-term holders, creating upward momentum.

Implications for Price Movement

The lack of fresh demand from short-term holders could suppress potential price rallies, as these investors are typically more responsive to market fluctuations. Moreno noted that during bull cycles, it is crucial for STHs to engage actively in the market to trigger and maintain upward price movements. This shift in supply dynamics reflects broader trends in investor behavior and market sentiment towards Bitcoin.

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