Bitcoin Diamond Hands Fuel Market Optimism: A Bullish Signal?

Bitcoin has traded within a tight range ($106,229 – $111,807) for the past five days, following its recent all-time high of $111,814. Despite increased miner selling pressure post-ATH, Bitcoin has remarkably held above $108,000. On-chain data reveals a compelling narrative: Bitcoin’s diamond hands are absorbing the selling pressure.

Long-Term Holders Accumulate, Spending Minimally

Data from CryptoQuant’s Long-Term Holder (LTH) Spending Binary Indicator shows it plummeting to its lowest level since September 2024, a trend initially highlighted by crypto analyst Alex Adler Jr. on X. The 15-day moving average has entered the minimal spending zone, a historically bullish precursor. Simultaneously, long-term holder supply has surged by roughly 300,000 BTC in the last 20 days, reversing a 2024 downtrend. Currently, 14.6 million BTC (74% of circulating supply) resides in LTH addresses.

This suggests that diamond hands—investors unwavering through volatility—are not just holding but actively accumulating. The chart below illustrates the correlation between minimal LTH spending and subsequent price increases, a pattern observed in Bitcoin’s uptrends during 2019, late 2020, and late 2024.

Bullish Implications for the Market

The combination of increased long-term holder supply and minimal selling indicates underlying market strength. Long-term investors’ confidence in Bitcoin’s valuation, even after recent price surges, is noteworthy. These holders, many in substantial profit, choose to hold, unlike short-term holders who have cashed out over $11.6 billion in profits this past month.

Historical parallels exist. September 2024 saw a similar LTH spending decline and supply increase, followed by a 96% Bitcoin price surge from ~$54,000 to ~$106,000. If history repeats, a similar rally from the current price could push Bitcoin near $212,000.

Bitcoin is currently trading at $109,000.

Featured image from Getty Images, chart from Tradingview.com