On-chain data shows that long-term holders of Bitcoin are selling. The following assesses whether the current sell-off levels are sufficient to peak prices.
Bitcoin long-term holders have recently sold off in large quantities.
In a new post on X, analyst Ali Martinez discusses the historical trend of long-term holders' holdings relative to Bitcoin's peaks. 'Long-term holders' (LTH) refer to BTC investors who have held Bitcoin for more than 155 days.
LTH is one of the two main categories in the BTC market divided by holding time, the other category is called short-term holders (STH).
Historically, the latter has proven capable of curbing weakness in the market, while the former consists of HODLers who almost do not react to price rises and falls.
Therefore, sell-offs by STHs are usually not noteworthy, but sell-offs by LTHs are noteworthy, as they are not particularly common events. One way to track diamond hands behavior is through their net position changes.
Net position change is an on-chain metric used to measure the total amount of Bitcoin entering or exiting the LTH group. Below is the chart shared by analysts, showing the trend of its value in the history of cryptocurrency.
As shown in the chart above, the net position change of Bitcoin LTH has sharply declined into negative territory in recent weeks, indicating that net supply is leaving this group.
This is not the first time this indicator has shown such a trend this year, as a similar situation was observed in the first quarter of this year. In the chart, Martinez highlighted this situation and other earlier instances of this trend.
It seems that large-scale sell-offs by LTHs often coincide with some kind of peak in cryptocurrency. 'Interestingly, in 2017 and 2021, their largest sell-offs occurred just before the last rally,' the analysts noted.
Therefore, if the current bull market exhibits similar behavior, this current LTH sell-off may actually be just the beginning of the final rally stage, which would lead to a cyclical top for Bitcoin.
Currently, this indicator is also not as negative as the largest red peaks during the bull markets of 2017 and 2021, which may indicate that a peak has not yet arrived. However, it remains to be seen whether the same pattern will repeat this time.
BTC price
Bitcoin has returned to the discovery mode of its all-time high (ATH) as its price has just set a new record above $107,000.
