On-chain data shows that the supply of Bitcoin held by short-term holders has recently fallen at its fastest monthly rate since 2012.
Bitcoin supply drops in the short term as investors hold on to it
As CryptoQuant author Axel Adler Jr. explains in a new article, mail At X, the 30-day change in short-term holder supply has fallen deep into negative territory recently.
“Short-term holders” (STHs) are Bitcoin investors who have purchased their coins within the past 155 days. This group is one of the two main segments of the Bitcoin market divided based on holding time, with the other group known as “long-term holders” (LTHs).
Statistically, the longer an investor holds their coins, the less likely they are to sell them at any point in time. Therefore, STHs can be considered representatives of the volatile side of the sector, while LTHs are the stubborn side.
One way to track the behavior of these groups is through the total amount of Bitcoin supply they currently hold in their wallets. Below is a chart shared by the analyst, which shows the 30-day change in supply held by STHs specifically.
The value of the metric appears to have plummeted in recent days | Source: @AxelAdlerJr on X
As shown in the chart above, the 30-day change in Bitcoin STH supply saw a sharp positive spike earlier in the year when the rally towards a new all-time high (ATH) occurred.
This indicates a significant shift in supply from LTHs to STHs. The chart shows that this is not unusual in bull runs, as LTHs have historically tended to take some HODLing profits when the asset reaches new highs.
The sales of these diamond hands during such periods are absorbed by new demand entering the market after falling into the trap of the hype caused by the rise.
Since Bitcoin hit the consolidation level, the LTH sell-off appears to have calmed down. Not only that, but the trend appears to have completely reversed recently, with the 30-day change in STH supply falling into negative territory.
Over the past month, the supply of STH has fallen by about 15%, the lowest recorded 30-day change since 2012, when the cryptocurrency was still in its infancy.
Naturally, this means that the supply of LTH has instead increased. However, one thing to keep in mind is that this trend does not indicate that LTHs are “buying” these tokens from the hands of STHs.
But what is happening is that STHs are “maturing” in the group, after surpassing the 155-day maximum. Thus, it seems that even STHs were content to be patient during this period of consolidation. Naturally, this rise in holding sentiment is a positive sign for Bitcoin.
Bitcoin price
At the time of writing, Bitcoin is trading at around $59,500, up about 5% over the past seven days.
Looks like the price of the coin has gone down over the last 24 hours | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
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