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After a massive bloodbath in May, Bitcoin and the cryptocurrency market entered a less volatile phase. However, its poor streak is not over yet. The world’s flagship crypto-asset went on a fresh decline following the development of the US Department of Justice [DOJ] recovering a chunk of hacked funds in the Colonial Pipeline hack. These funds in question were reportedly denominated in BTC.
Despite the ongoing rout in the market, there are participants who were currently accumulating Bitcoins. According to the latest weekly report by the blockchain intelligence company, Glassnode, a historically important cohort of holders have resumed accumulation
Bitcoin Long-term Hodlers are back
The supply held by Long-term holders [LTHs] was observed to have accelerated upwards. According to Glassnode, the limit for LTH status is those unspent transaction outputs [UTXOs] that have remained inactive for 155-days.
The LTH camp had previously distributed their coins when the Bitcoin market soared from just $10k all the way to its ATH above $64k. However, there has been a change in this trend. After the cryptocurrency went on a downward spiral, the net change in the supply of long-term holders switched upward demonstrating what it calls a “HODLing behavior”.
What does this mean?
This fractal closely resembled the late 2017 bull and early 2018 bear which, according to the report, describes the “inflection point “where this camp of holders stop spending, resume accumulation, and therefore holding. Can this be a sign that these are cheap coins and won’t get any cheaper in the near future? While this did not paint any bullish picture for the short-term market participants who were hit the hardest by the downturn of events, it did indicate a long-term bullish sentiment.
Let’s talk numbers. Currently, the long-term holders hold 10.9 million BTC which accounts for almost 60% of Bitcoin’s total circulating supply. It is also important to note that this category of holders today own 2.3 million more BTC as opposed to the coins owned by them at the peak of the 2017 rally. Commenting on this behavior, Glassnode concluded,
“This does highlight an intuitive reality; higher coin prices require larger capital inflows to sustain bull market trends. It also shows that the distribution of fewer coins can put in local/macro market tops if the capital inflow demand is not there.”