Bitcoin has crossed the $90,000 mark for the first time, marking a new milestone for the crypto market. Typically, when prices reach new highs, long-term holders (LTH) often start to take profits. However, data shows that during this rally, LTH are still holding on to Bitcoin and have no intention of selling.
So what does this mean for Bitcoin’s growth momentum? Let’s take a closer look at the behavior of long-term and short-term investors in the Bitcoin market.
1. Bitcoin Holder Classification: LTH and STH
In the Bitcoin market, investors can be divided into two main groups:
🟥 Short-Term Holders (STH): Investors who hold Bitcoin for less than 155 days. They tend to react quickly to short-term price fluctuations, and are susceptible to FOMO (fear of missing out) or FUD (fear, uncertainty, doubt).
🟦 Long-Term Holders (LTH): People who hold Bitcoin for more than 155 days. This group is usually more stable and less affected by short-term fluctuations. They tend to sell only when the price reaches a certain high, or when Bitcoin reaches new peaks.
2. LTH's Behavior When Bitcoin Price Increases
In previous bull cycles, long-term investors often took profits when Bitcoin reached historical highs. Some typical examples:
2017: As Bitcoin peaked near $20,000, the number of LTH dropped by more than 20% as they decided to take profits.
2021: LTH volume drops by about 14% as Bitcoin price hits near $69,000.
This shows that in previous cycles, when Bitcoin price increased to a significant level, long-term investors often chose to sell to realize profits.
3. Current Cycle: LTH Still Holding Bitcoin Tight
What is unique about the current bull run is that long-term investors are still holding onto Bitcoin despite the price reaching new highs. According to data from Glassnode:
LTH currently holds about 77% of the circulating Bitcoin supply, equivalent to about 15 million BTC.
Over the past month, the amount of Bitcoin held by LTHs has only decreased by about 3% – a much smaller number than in previous bull cycles.
This could imply that LTHs are expecting a higher price for Bitcoin and are not ready to sell at the moment.
4. Why LTHs Are More Patient This Cycle
There are several key factors that help explain why LTHs have a stronger "hold" sentiment this cycle:
Belief in Bitcoin's long-term potential: With the continued growth of the cryptocurrency ecosystem and growing adoption, LTHs may believe that Bitcoin still has a lot of room to grow and could become a global store of value.
Impact from macroeconomic factors: Rising inflation and monetary easing policies from central banks are making Bitcoin an attractive store of value. For many LTHs, holding Bitcoin can be a way to protect assets from the devaluation of traditional currencies.
The emergence of Bitcoin ETFs and the influx of large institutional money: The entry of large financial institutions and the approval of Bitcoin ETFs are creating a more stable and liquid environment for Bitcoin. This helps to reinforce the belief that the value of Bitcoin will continue to increase in the long term.
5. Market Impact: Can Bitcoin Price Go Higher?
Based on the current behavior of LTHs, it can be predicted that Bitcoin price will need to reach even higher levels to induce them to sell large amounts. If LTHs continue to hold on tightly, this could create a shortage of supply in the market, while demand continues to increase.
With capital inflows from institutional investors and ETFs, along with the bullish sentiment of LTHs, the market is likely to continue its upward momentum and even reach new highs in the near future.
Conclusion: Patience Is The Key To Success In The Current Cycle
The Bitcoin market is currently in a unique phase, where long-term investors who typically take profits at peak prices are still holding their positions and expecting higher prices. With supporting factors such as ETFs, institutional money, and a favorable macroeconomic environment, Bitcoin could be on its way to new milestones.
For long-term investors, this is the time to remain patient and keep faith in Bitcoin’s long-term potential. And for those new to the market, understanding the psychology and behavior of major holders such as LTH and STH will help them make smart investment decisions and take advantage of the opportunity from the next bull run.
