BTC On-Chain Analysis: Long-Term Holder Losses Reach All-Time High

In today’s on-chain analysis, BeInCrypto looks at indicators of BTC’s supply in profit and loss in the hands of both short-term and long-term holders. It turns out that the majority of coins in circulation are in loss today, and the indicators are at the lower areas of historical bear markets.

The losses and gains of BTC coins can be divided according to how long investors hold them. In the on-chain analysis, the threshold between short-term and long-term holders is assumed to be 155 days. If the coins have not moved during this time, the statistical probability of their movement (selling) decreases sharply. They become coins in the hands of long-term holders (LTH).

If, on the other hand, coins move (are bought or sold) in less than 155 days, they are statistically more likely to move further. Therefore, they are considered coins in the hands of short-term holders (STH).

November 2021 Long Term and ATH Holder Bags

According to data from glass knot, currently, the total supply in the hands of long-term holders has reached the new all-time high (ATH) of 13.62 million BTC. The previous ATH for this indicator was set in November 2021, at a time when Bitcoin hit its ATH of $69,000.

Source: Twitter

It should be noted that the fact that long-term holders hold their coins at the BTC price, which later turned out to be the peak, is very unusual. In all previous market cycles – including the $64,850 high in April 2021 – the path to the BTC price peak has always been associated with a drop in supply in LTH hands.

A decline in the supply of LTH naturally correlates with an increase in the supply in the hands of STHs. During a bull market, long-term holders who have bought BTC at a lower price in the past sell their coins to short-term buyers. In contrast, during a bear market, STHs capitulate and mostly sell their coins at a loss to LTHs. Bitcoin’s supply is once again returning to the hands of long-term holders.

However, Bitcoin price ATH in November 2021 had a different course. Long-term holders – confident that BTC will soon reach higher prices – chose not to sell their coins. At the same time, there were no new STHs on the market that were ready to buy. Bitcoin began a decline that continues to this day, and most LTHs were left with their bags. They had to accept the fact that their unrealized gains were shrinking and, over time, turning into unrealized losses.

Historical LTH loss levels

In the chart below, we can see how supply with losses in the hands of long-term holders is increasing dramatically. Currently, the chart has reached an area of ​​5 million BTC (red circle). This is the level that served as the benchmark for the absolute bottom of the price of BTC in 2019 and 2020 (green).

Source: Twitter

There is another zone, around 5.5 million BTC, which served as resistance in 2015. At that time, although the price of BTC did not fall below the low reached a few months earlier, the loss-making supply in the hands of LTHs has steadily increased.

This happened because many short-term holders who bought during the downtrend became long-term holders after 155 days. Many months of accumulation left their coins at a loss, and they became LTHs during that time.

If this scenario were to repeat itself now, the price of BTC need not break below the June low of $17,600. A long enough accumulation will cause the losses of long-term holders to reach the next resistance zone (red). On the other hand, considering the increase in the supply of BTC in circulation due to the systematic mining of new coins, it is not impossible that the indicator will soon reach a new ATH.

Circulating Supply and Coins in STH Hands

For a complete picture of losses in the Bitcoin market, two other indicators are worth mentioning. The first is the percentage of the total supply in profit. It currently sits at 48.71% and is in the green zone of historic lows.

A chart of this indicator was posted on Twitter by @OnChainCollege, which said that “more than 9.8 million pieces are currently under water”. It is easy to count that at this point in the bear market, 51.29% of all BTC in circulation are in loss.

It should be added that at previous levels of the price of BTC, the percentage of supply in profits was even lower. At the beginning of 2019, it was 39% and in March 2020, it was 43%. This means there is still considerable room for potential declines.

Source: Twitter

In conjunction with this data is the supply chart in the hands of short-term holders. Currently, this indicator is also in the red zone of historical lows. However, here too we can see that it is today well above the lows reached in 2015 and during the correction in the summer of 2021.

The conclusion is that both short-term and long-term holders may still suffer more losses. Interestingly, this is not necessarily related to the lower price of Bitcoin itself, but only to the manifestation of a period of potential long-term accumulation.

Source: Twitter

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