In a bullish crypto market, it is common for long-term holders (LTHs) to start selling their Bitcoin as prices rise. This trend was particularly noticeable from early 2024 to April. The data from CryptoQuant shows that the supply held by 1-year and 2-year old unspent transaction outputs (UTXOs) experienced significant drops. Despite the selling pressure on these UTXOs, the supply of Bitcoin in UTXOs older than three years continues to grow. This suggests that long-term holders are increasingly optimistic about the future.
In bullish market conditions, it is typical to see LTHs selling some of their Bitcoin holdings as prices increase. According to @0nchained, the 1-year+ and 2-year+ cohorts have stopped selling and are now in a holding phase. This shift in behavior indicates a level of confidence in the long-term potential of Bitcoin.
More than 50% of the total Bitcoin supply has been inactive on-chain for over a year, demonstrating the strong belief in the long-term value of the coin among its holders. This indicates that these owners have faith in holding onto their Bitcoins rather than selling them during market fluctuations. Their confidence suggests a belief in the continuous growth of Bitcoin’s value over time.
After a recent dip to $56k, Bitcoin is now recovering its price, leading holders to change their approach. Those who have held their Bitcoins for at least a year or two are no longer selling. This shift from distribution to accumulation signals a renewed trust in the future price of BTC among these groups, who prefer to hold onto their assets rather than cash out at current rates.
As Bitcoin tests key support levels, the technical outlook is crucial. On-chain metrics and the behavior of long-term holders suggest strong underlying bullishness, but breaching the daily Ichimoku cloud could change market sentiment and lead to a retrace to $64k. Investors should closely monitor technical and on-chain indicators to make informed decisions in the coming weeks.
Ultimately, the activity of long-term Bitcoin holders provides insight into the sentiment towards this asset class. The fact that more than half of all bitcoins have remained dormant for over a year indicates a belief in its long-term value. With critical support levels still under pressure from BTC prices, the actions of these participants, along with key technical signals, will determine the direction of the markets.