On-chain data shows that Bitcoin could currently follow a similar pattern as in the previous cycle regarding this indicator.
Bitcoin could now enter the second phase of the bull market
In CryptoQuant Quicktake mailOne analyst noted that the recent trend in long-term Bitcoin holder supply is reminiscent of what was observed in the 2017 cycle.
Long-term holders (LTHs) make up one of the two main segments of the Bitcoin user base based on hold time, while the other side is known as short-term holders (STHs).
The interval between these two groups is 155 days, with investors who bought within this window part in STHs, while those who hold more than that dip in LTHs.
Statistically, the longer an investor holds onto their coins, the less likely they are to ever sell said coins. Thus, LTHs are considered to include the most determined market participants.
Below is a chart showing the trend in the combined amount of supply held by participants in the respective Bitcoin pools.
As can be seen in the chart, Bitcoin LTH supply saw a sharp decline during the Q1 rally, suggesting that even these diamond hands could not resist the temptation to take profits.
Along with this decrease in LTH supply, STH supply has naturally risen, since when LTHs move their tokens on the blockchain, they become part of the STH pool instead.
More recently, LTH supply has reversed this decline from earlier in the year, but with the recent rise to a new all-time high (ATH), the metric has changed directions again.
In the chart, the quantification highlighted how a similar pattern also emerged during the 2017 cycle; The first phase of distribution of LTHs was followed by accumulation, which then led to the second phase of distribution.
The latest shift in LTH supply could be the start of the second phase distribution of the current cycle, as new capital flows in to take coins out of the hands of HODLers.
The LTH width is not the only metric that shows a trend that matches that of the previous cycle. As the chart shared by the analyst shows, Bitcoin Binary CDD is also forming an interesting pattern.
Coin Destructive Binary Days (CDD) basically tells us whether HODLers are selling below or above the historical average. From the chart, it appears that the 152-day moving average (MA) of this measure may show a second breakout similar to the breakout that led to the 2021 uptrend.
Bitcoin price
Bitcoin continues in ATH exploration mode with its price trading around $75,900.