Bitcoin’s Bull Run Enters Phase 2: Is History Repeating?
Bitcoin’s Bull Run Enters Phase 2: Is History Repeating?
On-chain data suggests that Bitcoin could be mirroring a pattern seen in a previous cycle, potentially signaling a new phase of the bull run. In a recent CryptoQuant Quicktake post, an analyst highlighted the intriguing resemblance between the current trend in Bitcoin’s long-term holder (LTH) supply and the 2017 cycle.
For context, Bitcoin users are categorized into two groups based on holding time: long-term holders (LTHs) and short-term holders (STHs). The dividing line is 155 days. Investors holding coins for more than 155 days fall under the LTH category, while those holding for less are STHs.
Historically, LTHs are known for their resolute stance, less likely to sell their coins compared to STHs. A chart showcasing the combined supply held by both groups reveals a compelling story.
Earlier this year, the Bitcoin LTH supply saw a notable decline during the first quarter’s rally. This suggests even these diamond hands couldn’t resist the temptation of profit-taking. Consequently, the STH supply naturally increased as LTHs transferred their tokens on the blockchain.
Interestingly, the LTH supply reversed this downward trend, only to shift direction again with the recent rally to a new all-time high (ATH). The analyst highlights a parallel pattern observed in the 2017 cycle: a first phase of distribution from LTHs, followed by accumulation, leading to a second phase of distribution.
This recent turnaround in LTH supply could signify the start of the phase 2 distribution for the current cycle, where fresh capital inflows acquire coins from HODLers.
The LTH supply isn’t the sole metric mirroring the previous cycle. The Bitcoin Binary Coin Days Destroyed (CDD) metric, indicating whether HODLers are selling more or less than the historical average, exhibits an intriguing trend. The 152-day moving average (MA) of this metric might be showcasing a second breakout, reminiscent of the one preceding the 2021 bull run.
As Bitcoin continues to explore new ATHs, currently trading around $75,900, these on-chain indicators add an intriguing layer to the ongoing market narrative.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com