During a bullish period in the cryptocurrency market, it is common for long-term holders (LTHs) to sell their Bitcoin as prices rise. This trend was particularly noticeable from early 2024 until April, as the supply of 1-year and 2-year old unspent transaction outputs (UTXOs) experienced significant drops, according to CryptoQuant. However, despite the selling pressure on these UTXOs, the supply of Bitcoin in UTXOs older than three years continues to grow. This indicates a heightened sense of optimism among long-term holders.
In times of bullishness, it is typical to see long-term holders selling a portion of their Bitcoin holdings as prices increase. However, recent data suggests that the 1-year and 2-year cohorts have stopped selling and have transitioned from a distribution phase to a holding phase. This can be seen as a positive sign for the long-term confidence in Bitcoin.
More than 50% of the total Bitcoin supply has been inactive on-chain for over a year, indicating a strong belief in the long-term value of this cryptocurrency among its holders. This suggests that these owners are confident in holding onto their Bitcoins rather than selling them when the market experiences fluctuations. Such behavior demonstrates a faith 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 behavior. Those who have held onto their Bitcoins for at least one or two years are no longer selling them. This shift from distribution to accumulation suggests that these holders once again trust in the future prices of BTC. As a result, they prefer to hold onto their assets rather than converting them into cash at the current rates.
The technical outlook for Bitcoin is currently at a crucial point. Prices are testing key support levels, and the behavior of long-term holders and other on-chain metrics indicate a strong underlying bullish sentiment. However, if the daily Ichimoku cloud is breached, market sentiment could reverse, potentially causing 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 Bitcoin holders over an extended period provides insight into people’s sentiments towards this asset class. The fact that more than half of all bitcoins have remained dormant for over a year showcases a belief in its long-term value. With critical support levels still being tested by BTC prices, the actions of these participants, along with key technical signals, will determine the future direction of the market.
